[2020] KECPT 124 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO. 82 OF 2018

TELEPOSTA SOCIETY LIMITED........................................CLAIMANT

VERSUS

VALARIE ATIENO ORANGO.........................................RESPONDENT

RULING

What is before us for consideration and determination is the Respondent‘s Application dated 8. 10. 2019. It seeks, in the main, for following orders;

1. That the application be certified urgent and service be dispensed with at the first instance and the same be heard exparte;

2. That pending the hearing and determination of this application interparties, the ex parte judgment entered herein against the defendant be set aside and/or vacated .

3. That the ex parte judgment entered by this court be set aside and/or vacated and the defendant be granted leave to file its defence out of time and the main suit thereafter be admitted for interparties hearing.

4. That the costs of this application be in the cause.

It is supported by the grounds on its face and the Affidavit sworn by Valerie Atieno Orango on even date. Prayers 1 and 2 have been spent.

It is the claimant’s case that Judgment in this matter was entered as a result of failure by the Advocate instructed by the Respondent to enter appearance and defend her. She contends that upon service of summons, she instructed the firm of Peter Karanja and company advocates to take up the matter on her behalf. That to her utter surprise, the Advocate did not take up the matter. That she only became aware of the judgment upon receipt of Notice of entry of judgment. That when she followed up the matter with the firm of Peter Karanja and company advocates, she was informed that the Associate who was handling the matter left the firm and failed to properly hand over leading to some of the files she was handling being left unattended.

On the basis of the foregoing, the Respondent contend that she failed to enter appearance and defend herself as a result of mistake on the part of her advocate and that the said mistake should not be visited on her. That she has a defence which raises triable issues.

The Claimant has opposed the Application by filing a Replying Affidavit sworn by Maryanne Ndeki on 14. 1.2020. Vide this Affidavit, the Claimant contend that upon filing of the claim on 2. 3.2018, and the summons subsequently extracted, the Respondent became practically untraceable prompting it to file an Application for substituted service (on 16. 8.2018). That upon grant of the said prayer, the Respondent was served with summons to enter appearance vide Daily Nation Newspaper issue of 28. 6.2019. That the Respondent subsequently failed to enter appearance prompting to request judgment which was entered on 26. 8.2019.

The Claimant opposes “The contention” by the Respondent that she became aware of the matter upon service of entry of judgment and also the fact that she instructed the firm of Peter Karanja and company advocates. That the judgment on record is a regular one and that it should be allowed to enforce it.

Written submissions

Vide the directions given on 21. 1.2020, the Application was disposed of by way of written submissions. The Respondent filed her submissions on 19. 2.2020 while the Claimant filed the same on 28. 2.2020.

Respondent’s submissions

Vide these submissions, the Respondent reiterated her averments in the Application above and submitted that the Tribunal has discretion by dint of order 10 Rule 11 of the Civil Procedure Rules to set aside the exparte Judgment. She then went ahead to support this submission by citing the case of Wachira Karani Versus Bildad Wachira [2016]eKLR

Claimant’s Submissions

Likewise, the Claimant reiterated the averments of Maryanne Ndekiabove and went ahead to cite the decision of the court in the Bildad case above. Further, it cited the decision of the court in other cases including :

(a) Patel Vs East Africa Cargo Handling Service Limited [1974]EA 75;

(b) Job Kilach Versus Nation Media Group Limited, Salaba Agencies, Limited And Another [2015]eKLR

Richard Nachapai Leiyangu Versus IEBC And 2 Others; and

(c) Shahures Mbogo And Law Society Of Kenya Versus The Centre For Human Rights And Democracy And 12 Others;

Issues for Determination

The Respondent’s Application dated 8. 10. 2019 raises the following issues for determination:

(a) Whether the Respondent has laid a proper basis to warrant the Tribunal to set aside the ex parte judgment entered on 26. 8.2019; and.

(b) Who should meet the cost of the Application.

Setting aside ex parte judgment

This Tribunal has jurisdiction to set aside an ex parte judgment by dint of Order 10 Rule 11 of the Civil Procedure Rules. This 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.”

It thus follows that the jurisdiction to set aside an ex parte judgment is a discretionary one and that the main concern of the Tribunal is to do justice to the parties. This was the holding of the court in the Patel case above. In the pertinent part, the court held thus;

“ 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 the Tribunal can exercise its discretion, it has to firstly satisfy itself whether or not the judgment to be set aside is a regular one or not. If the judgment is irregular, the Tribunal will set it aside ‘ex debto justiciae’.This was the holding in the case of K- Rep Bank Limited Versus Segment Distributors Limited [2017]eKLR.

In the case of Fidelity Commercial Bank Limited Vs Owen Amos Ndungu And Another, H.CC.NO. 241 of 1998, the court gave the following distinction about a regular and irregular judgment:

“..............Where summons to enter appearance has been served, and there is default in entry of appearance, the exparte judgment 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 an ex parte judgment is a regular one, it can only be set aside under the circumstances set forth by the court of Appeal in the case of James Kanyiita Nderitu And Another Versus Marios Philotas Ghikas And Another [2016] eKLR,that is,

(a) Reason for failure of the Defendant to file his Memorandum of Appearance or defence;

(b) The length of time that has elapsed since the default judgment was entered;

(c) Whether the intended Defence raises triable issues;

(d) The respective prejudice each party is likely to suffer; and

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

Looking at these principles in light of the facts of the present Application, we deduce as follows;

(a) That the Judgment entered on 26. 8.2019 is a regular one as the Respondent does not dispute service of summons to enter appearance ;

(b) That the Application was brought within a period of approximately 1 ½ months from the date of entry of judgment;

(c) That the main reason why the Respondent did not enter appearance within the time limited by law is the fact that her Advocate on record did not take up instructions to defend the claim;

(d) The Respondent has annexed a draft statement of Defence, Vide the said draft Defence, the Claimant has denied ever embezzling and/or misappropriating funds.

We will consider some of these principles specifically below.

Time

As stated above, one of the key principles for setting aside a regular judgment is the length of time a party has taken to move court upon entry of the said judgment. In the instant case, Judgment was entered on 26. 8.2020 and the Respondent filed the instant Application on 11. 10. 2019. This is a period of approximately 1 ½ months. We find that the Respondents moved the Tribunal timeously.

Reason for failing to enter Appearance.

The Respondent has not denied receipt of summons but has laid blame on his Advocate. She avers that she forwarded the claim as well as summons to enter appearance to the said Advocate but then chose not to enter appearance and file a Defence.

On its part, the claimant has discounted this argument on the basis that the same does not have a factual basis. That the Respondent has not led evidence to prove that she indeed instructed the firm of Peter Karanja and company advocates. That it took concerted efforts to serve the Respondent with court papers.

We have considered the reasons advanced by the Respondent’s failure to enter appearance. Whilst there is nothing on record to prove that indeed she instructed an advocate to represent her, we consider the magnitude of the Claim and give her a benefit of doubt and find that she indeed instructed the said law firm to represent her. Having failed to do so, we find that the mistake of the said firm of advocates should not be visited on the Respondent. We are satisfied by the reason advanced for failure to enter appearance or file a defence.

Triable issues

The claimant’s case is that at all times material to the suit, the Respondent worked as its Front Office Services Activity(FOSA) teller. That during the said period, the Respondent conducted FOSA business in a manner that was detrimental and not in the best interest of the Claimant. That the Respondent’s teller account statement reflected an un-reconciled balance. That subsequently, the Claimant incurred a loss of Kshs.7,992,133/=.

On its part the Respondent in her draft statement of defence has disputed ever embezzling and/or misappropriating funds and has invited the claimant to strict proof. A triable issue, that is, that of establishing whether or not the Respondent is responsible for the loss of Kshs.7,992,133. 00/= arises. The same can only be established if parties are allowed to make their respective representation including filing of documents and leading evidence in a formal hearing.

Based on the foregoing, we find that the draft defence raises triable issues which ought to be interrogated after full hearing.

Prejudice

The question arises as regards the prejudice each party will suffer. Based on the material before us, it is apparent that the that the Respondent is likely to suffer loss of Kshs.7,992,133/= were the allegation of mismanagement of funds to fail. Conversely, the Claimant would suffer loss in terms of time taken to enjoy the fruits of its judgment. Putting the two on a weighing scale, it is our considered finding that the Respondent is likely to suffer more prejudice if the instant Application is not allowed. On the other hand, the claimant can be remedied by way of award of costs.

Appropriate orders

Based on the foregoing, we determined the application as follows;

1. The default judgment entered on 26. 8.2019 is hereby set aside on condition that the Respondent pays the claimant thrown away costs assessed at Kshs.20,000/=;

2. The Respondent is directed to file and serve a defence within 14 days herein;

3. The claimant to file a Reply to Defence (if need be) within 7days of service; and

4. Thereafter, parties to process the main suit for hearing in the usual manner.

Read and delivered in accordance with the guidelines issued by the Hon. Chief Justice on 15. 3.2020, this 9th day of April, 2020.

Prepared by Hon. B.Kimemia Chairman, Hon. F. Terer Deputy Chairman, P. Gichuki Member.

With consent of the parties, the final orders to be delivered by email, as accordance to the prevailing measures during the covid-19.

Hon. B. Kimemia Chairman Signed 9. 4.2020

Hon. F. Terer Deputy Chairman Signed 9. 4.2020

P. Gichuki Member Signed 9. 4.2020