RULING
1. Before the Court is the Defendant’s Notice of Motion dated 28 September 2023 seeking, inter alia, the setting aside of the interlocutory judgment entered on 13 July 2023 and leave to defend the suit.
2. The application is supported by the affidavit on record and the written submissions filed on behalf of the Defendant. The Plaintiff opposed the application through a replying affidavit and written submissions.
3. The material background is not in dispute. The Defendant was duly served, entered appearance, but did not file a defence within the prescribed period. An interlocutory judgment was subsequently entered. The Defendant now seeks the Court’s discretion to set aside that judgment and to be allowed to defend the suit on the merits.
Issues for Determination
4. The issues that arise for determination are narrow and well settled in law:
a. Whether the interlocutory judgment entered was regular; and
b. If so, whether the Court should exercise its discretion to set it aside and on what terms, if any.
Analysis
5. There is no serious contest that the interlocutory judgment entered on 13 July 2023 was a regular judgment. Service was effected, appearance was entered, and no defence was filed within time. The application therefore falls to be considered under Order 10 Rule 11 of the Civil Procedure Rules.
6. The application therefore falls for consideration under Order 10 Rule 11 of the Civil Procedure Rules. The discretion conferred upon the Court under that provision is wide, but it is not at large. It must be exercised judicially and on the basis of established principles.
7. Those principles were set out in the seminal case of Mbogo & Another v Shah (1968) 1 EA, where the Court emphasised that the discretion to set aside a regular default judgment is intended to avoid injustice or hardship resulting from accident, inadvertence or excusable mistake or error, but not to assist a party who has deliberately sought to obstruct or delay the course of justice. The Court further underscored that the length of delay, the explanation offered, the existence of a defence with real prospects, and the prejudice to the successful party are all material considerations.
8. The delay in the present case, while not insignificant, cannot be characterised as so egregious as to render the application an abuse of process. The Defendant had entered appearance, participated in interlocutory proceedings, and the default relates specifically to the failure to file a defence within time.
9. I have considered the draft defence annexed to the application. Without expressing any concluded view on the merits, I am satisfied that the issues raised concerning performance under the subcontract, valuation of works, and alleged overpayment are not plainly frivolous. This court has previously stated on occasion that the existence of a defence with real prospects is a relevant, though not determinative, factor in the exercise of discretion.
10. At the same time, this Court must guard against undermining the principle of finality in litigation and the legitimate expectation of a successful litigant to enjoy the fruits of a regularly obtained judgment. Therefore, a court may also decline to set aside a judgment where the delay is inordinate and unexplained, and where doing so would occasion undue prejudice. That concern remains live in the present matter.
11. It is for that reason that the Court considers that the competing interests of the parties are best balanced by the grant of conditional leave. As stated in Rayat Trading Co. Ltd v Bank of Baroda & Tetezi House Ltd [2018] eKLR, a court setting aside a default judgment may impose terms designed to secure the Plaintiff while preserving the Defendant’s right to be heard. Such conditions are not punitive; they are protective.
12. This is also in line with the principle set out in the decision of Aldermen Limited vs Shah & 3 others [2022] eKLR where the court held that “Justice is better served when all parties to a dispute are accorded an opportunity to be heard on merits to enable each of the parties ventilate their issues, unless it is demonstrably shown that the party in question has sought to merely delay or obstruct the cause of justice.”
13. In the circumstances of this case, requiring the deposit of the decretal sum in court is a proportionate and appropriate safeguard. It secures the Plaintiff against prejudice arising from further delay, while ensuring that the dispute is determined on the merits.
Disposition
14. Accordingly, the Defendant’s Notice of Motion dated 28 September 2023 is allowed on the following conditions:
a. The interlocutory judgment entered on 13 July 2023 and all consequential orders are hereby set aside.
b. The Defendant shall deposit 50% of the decretal sum in an interest earning account in the names of the advocates on record for the parties within thirty (30) days from the date hereof.
c. Upon compliance with paragraph (b), the Defendant shall file and serve its defence within fourteen (14) days.
d. In default of compliance with paragraph (b), the orders setting aside the judgment shall lapse automatically, and the interlocutory judgment shall stand reinstated without further order of the Court.
e. The Plaintiff is awarded wasted costs arising out of litigation proceedings set aside.
f. Costs of the application shall be in the cause.
1. Before the Court is the Defendant’s Notice of Motion dated 28 September 2023 seeking, inter alia, the setting aside of the interlocutory judgment entered on 13 July 2023 and leave to defend the suit.
2. The application is supported by the affidavit on record and the written submissions filed on behalf of the Defendant. The Plaintiff opposed the application through a replying affidavit and written submissions.
3. The material background is not in dispute. The Defendant was duly served, entered appearance, but did not file a defence within the prescribed period. An interlocutory judgment was subsequently entered. The Defendant now seeks the Court’s discretion to set aside that judgment and to be allowed to defend the suit on the merits.
Issues for Determination
4. The issues that arise for determination are narrow and well settled in law:
a. Whether the interlocutory judgment entered was regular; and
b. If so, whether the Court should exercise its discretion to set it aside and on what terms, if any.
Analysis
5. There is no serious contest that the interlocutory judgment entered on 13 July 2023 was a regular judgment. Service was effected, appearance was entered, and no defence was filed within time. The application therefore falls to be considered under Order 10 Rule 11 of the Civil Procedure Rules.
6. The application therefore falls for consideration under Order 10 Rule 11 of the Civil Procedure Rules. The discretion conferred upon the Court under that provision is wide, but it is not at large. It must be exercised judicially and on the basis of established principles.
7. Those principles were set out in the seminal case of Mbogo & Another v Shah (1968) 1 EA, where the Court emphasised that the discretion to set aside a regular default judgment is intended to avoid injustice or hardship resulting from accident, inadvertence or excusable mistake or error, but not to assist a party who has deliberately sought to obstruct or delay the course of justice. The Court further underscored that the length of delay, the explanation offered, the existence of a defence with real prospects, and the prejudice to the successful party are all material considerations.
8. The delay in the present case, while not insignificant, cannot be characterised as so egregious as to render the application an abuse of process. The Defendant had entered appearance, participated in interlocutory proceedings, and the default relates specifically to the failure to file a defence within time.
9. I have considered the draft defence annexed to the application. Without expressing any concluded view on the merits, I am satisfied that the issues raised concerning performance under the subcontract, valuation of works, and alleged overpayment are not plainly frivolous. This court has previously stated on occasion that the existence of a defence with real prospects is a relevant, though not determinative, factor in the exercise of discretion.
10. At the same time, this Court must guard against undermining the principle of finality in litigation and the legitimate expectation of a successful litigant to enjoy the fruits of a regularly obtained judgment. Therefore, a court may also decline to set aside a judgment where the delay is inordinate and unexplained, and where doing so would occasion undue prejudice. That concern remains live in the present matter.
11. It is for that reason that the Court considers that the competing interests of the parties are best balanced by the grant of conditional leave. As stated in Rayat Trading Co. Ltd v Bank of Baroda & Tetezi House Ltd [2018] eKLR, a court setting aside a default judgment may impose terms designed to secure the Plaintiff while preserving the Defendant’s right to be heard. Such conditions are not punitive; they are protective.
12. This is also in line with the principle set out in the decision of Aldermen Limited vs Shah & 3 others [2022] eKLR where the court held that “Justice is better served when all parties to a dispute are accorded an opportunity to be heard on merits to enable each of the parties ventilate their issues, unless it is demonstrably shown that the party in question has sought to merely delay or obstruct the cause of justice.”
13. In the circumstances of this case, requiring the deposit of the decretal sum in court is a proportionate and appropriate safeguard. It secures the Plaintiff against prejudice arising from further delay, while ensuring that the dispute is determined on the merits.
Disposition
14. Accordingly, the Defendant’s Notice of Motion dated 28 September 2023 is allowed on the following conditions:
a. The interlocutory judgment entered on 13 July 2023 and all consequential orders are hereby set aside.
b. The Defendant shall deposit 50% of the decretal sum in an interest earning account in the names of the advocates on record for the parties within thirty (30) days from the date hereof.
c. Upon compliance with paragraph (b), the Defendant shall file and serve its defence within fourteen (14) days.
d. In default of compliance with paragraph (b), the orders setting aside the judgment shall lapse automatically, and the interlocutory judgment shall stand reinstated without further order of the Court.
e. The Plaintiff is awarded wasted costs arising out of litigation proceedings set aside.
f. Costs of the application shall be in the cause.