[2021] KECPT 533 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.103 OF 2020

VICTOR OMONDI OCHOLA...................................CLAIMANT

VERSUS

METROPOLITAN NATIONAL

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

RULING

Vide the Application dated 7. 7.2020, the Respondent has moved this Tribunal seeking for the following Orders:

1. That due to the urgency of this Application, service thereof be dispensed with, the same be certified urgent and heard ex-parte in the first instance;

2. That pending interparties hearing of this application, an order be and is hereby issued staying execution by way of sale of the assets of the Respondent/Applicant;

3. That the interlocutory judgment entered as against the Respondent for default of defence, together with all consequential orders be and are hereby set aside and the Respondent/ Applicant be allowed to file its Defence; and

4. That the costs of this Application be provided for.

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

a. Supporting Affidavit sworn by David Muhoro on 7. 7.2020;and

b. Further Affidavit sworn by the same David Muhoro on 3. 8.2020.

The Claimant has opposed the Application by filing a Replying Affidavit sworn by himself on 27. 7.2020.

Vide the directions given on 6. 8.2020, the Application was canvassed by way of written submissions. The Respondent filed its submissions on 17. 8.2020.

In the proceedings of 3. 11. 2020, the Claimant stated that he was going to Rely on the Replying Affidavit on record and that he was not going to file written submissions.

Respondent’s Contention

In this Application the Respondent seeks for the setting aside of the default judgment entered on 22. 6.2020 on the ground that there was inadvertent delay on the part of the Respondent to file a Memorandum of appearance in the matter. That the delay was occasioned by insufficient instructions to the Respondent’s counsel on record. That the said insufficiency of instructions is attributed to the onset of Covid- 19 pandemic. That the Respondent has a good Defence with high chances of success. That the Claimant did not follow due process while serving his Notice of withdrawal.

Claimant’s Case

The Claimant has opposed the Application on grounds that the Respondent has not given a valid reason as to why it did not enter Appearance and file Defence in good time. That Covid- 19 struck in March 2020 and cannot be used as an excuse for not entering Appearance of filing Defence.

That he served the Respondent with a resignation letter on 17. 11. 19. That the instant Application is merely meant to delay this matter.

Issues for determination

This Application has presented the following issues for determination:

a. Whether the Respondent has established a proper basis to warrant the setting aside of the default judgment entered on 22. 6.2020;

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, an issue arises as to whether the instant Application has met the conditions for settling aside a default judgment. We will answer this question by looking at the said conditions contextually as follows:

Reason for failure to enter Appearance

The Respondent has attributed its failure to enter Appearance or file a Defence to the onset of Covid-19 pandemic. It acknowledges having received summons to enter Appearance on 18. 3.2020 but a few days later, Covid- 19 broke out thus leading to several measures being imposed by the Government including the locking down of the Country. That these events hampered the process of instructing its advocates on record to take up the matter and file a Defence.

We take judicial Notice that indeed Covid- 19 broke out early March, this year. We agree with the Respondent that the subsequent measures imposed by the Government may have hampered the process of instructing counsel to take up the matter on its behalf. We are thus satisfied that this is a good explanation as to why the Respondent did not enter Appearance and file a Defence in good time.

Draft Defence

A question arises as to whether the Draft Defence raises triable issues. We have perused the said Defence the Respondent’s main line of Defence is that the Claimant did not issue a 60 days’ Notice before withdrawing from it. That the Claimant ought to issue the said Notice so as to enable the Respondent process his withdrawal. That further and as per the Respondents Annual General Meeting of 2019, it was resolved that members refunds were to be rescheduled on a first come first serve basis and therefore the Claimant’s refunds is scheduled to be paid in January 2022.

With this averment alone, we find that the said Defence does not raise any triable issue and in the converse it constitute an admission that it owes the Claimant deposits which are due for refund in January 2022. We are therefore delivering this ruling at a time when the Claimant’s refunds are due for processing. We thus hold that the said draft Defence does not raise any triable issue.

Conclusion

The upshot of the foregoing, is that we do not find merit in the instant Application and dismiss it with no orders as to costs.

Ruling signed, dated and delivered virtually this 7th day of January, 2021.

Hon. F. Terer Deputy Chairman Signed 7. 1.2021

Mr. P. Gichuki Member Signed 7. 1.2021

Mr. B. Akusala Member Signed 7. 1.2021

In the presence of Mr. Mutemi holding brief for Mr. Thimba for Respondent

Claimant present

Court clerk Maina

Hon. F. Terer Deputy Chairman Signed 7. 1.2021

Mr. Mutemi – Pray for stay of execution

Tribunal- 21 days stay of execution

Hon. F. Terer Deputy Chairman Signed 7. 1.2021

Tribunal- Further Orders mention at Kisumu on 8. 2.2021.

Hon. F. Terer Deputy Chairman Signed 7. 1.2021