( Appeal from the Ruling dated 10/12/2021 delivered in Nairobi CMCC No. 2497 of 2015 by Hon. S.N. Muchungi - SRM )
JUDGMENT
1. This Appeal arises from the Ruling referred to above, delivered in the said lower Court suit, in which the Appellant was the Defendant, while the Respondent was the Plaintiff. By the Ruling, the Court declined to set aside the ex parte default Judgment entered against the Appellant on 12/02/2016.
2. The background of the matter is that by the Plaint dated 23/04/2015, the Respondent, through Messrs Mulondo, Oundo, Muriuki & Co. Advocates , sought Judgment against the Appellant for a sum of Kshs 1,917,399/- plus interest and costs being monies alleged to have been overdrawn by the Defendant from its bank account held at the Plaintiff under an overdraft facility, but which amount the Defendant had failed to reimburse into the account.
3. Being unable to trace the Appellant, the Respondent was allowed to serve Summons upon the Appellant by way of registered post. Default Judgment was then entered on 12/02/2016 upon the Respondent’s Request for Judgment when no appearance nor defence was filed despite there being a Return of Service indicating that the Appellant had been served with Summons by way of registered postage via the Defendant’s postal address appearing in the CR 12 obtained from the office of the Registrar of Companies. The CR 12 also revealed the Appellant’s directors to be two - Mohamed Adan Bare and Mohammed Farah Abdi .
4. From an Affidavit on record sworn by the Respondent, there is indication that the Respondent then took out Warrants of Attachment for execution of the Decree by its Auctioneers but learnt that the Defendant had relocated to an unknown location. There is further indication that the Respondent, through its private investigators also learnt that although the Defendant was still operating, it had no attachable assets, but its directors did.
5. On the above grounds, the Respondent filed the Application dated 24/04/2019, more than 3 years after Judgment was entered whereof it applied that the Defendant’s two directors - the said Mohamed Adan Bare and a new individual named as Ali Noor Abdi - be summoned to attend Court to be examined on the whereabouts, and attachable value of the Appellant’s assets, and for “ lifting of the corporate veil ” to allow the Respondent to execute the Decree against the directors. According to the subject Affidavit of Service, the two directors were allegedly served with the Application together, at the Nakuru County Assembly on 17/10/2019. I gather from the record that the directors however failed to attend Court on several occasions leading to the order for their examination (the first part on the Application) being granted ex parte on 31/11/2020.
6. Thereafter, the said Mohammed Aden Barre , through Messrs Othieno & Co. Advocates , filed the Replying Affidavit he swore on 12/04/2021 opposing the Application for examination of directors. He deponed that he was not able to produce the Appellant’s books of accounts as the company was managed by his co-director - Mohammed Farah Abdi - and he never had access thereto. He also disclosed that he only learnt of the suit when his Lawyer shared with him the Summons to Enter Appearance, upon which the Lawyer perused the Court file and “discovered” the entry of default Judgment. He does not however disclose the dates when the Summons was shared with him, or when the Lawyer perused the Court file. He also exonerated his said co-Director, Mohammed Farah Abdi , from the allegation that he, too, was served with the Summons, urging that the person to whom the Summons was addressed via the registered post, one Ali Noor Abdi , was not a director of the Appellant. He further denied that he was served in the Nakuru, and also denied receipt of the Summons to Enter Appearance served by post earlier, and also the Notice of Entry of Judgment, pointing out that the address used to serve was “ P.O. Box 68766-00622 ”, while in the CR 12 relied on, the address disclosed is “ P.O. Box 41684-80100 Mombasa ”, and also urging that the addition, in handwriting, of the second address in the Application to serve by registered post does not override the above facts. He further contended that the postal address appearing on the Certificate of Postage produced is too faint to be read through, and thus illegible. For the said reasons, he asked the Court to stay the proceedings, and allow the Appellant to file an Application to set aside the Judgment.
7. The Court however declined to stay the examination of the directors and directed that it proceeds. The same did not however take off as the said directors again failed to attend Court on several further occasions.
8. I note that the Record of Appeal also has an Application by the Appellant dated 28/05/2021 seeking the setting aside of the default Judgment, and that the Appellant be granted leave to file a Defence. I note further that the Supporting Affidavit thereto is basically a restatement of the contents of the Replying Affidavit recounted above, and is also sworn by the same Mohamed Aden Bare . I have however not found a copy of this Application in the lower Court file.
9. There is however a copy of the Ruling 2/12/2022 in the lower Court file, but which is not included in the Record of Appeal, by which Hon. Muchungi , allowed the remaining portion of the earlier Application dated 29/04/2021. She thus “lifted’ the Defendant’s “ corporate veil ” and ordered that the said Mohamed Aden Bare do pay the decretal sum which had, by then, ballooned to Kshs 2,499,804/-, or be committed to civil jail. In the Judgment, the Magistrate held as follows:
“The Plaintiff filed the present Application and initially obtained orders to have the shareholders and directors of the Defendant summoned to attend Court to be examined on the company’s assets and to produce all its books of accounts and other documents relating to the company.
The directors failed to attend court on a number of occasions despite being aware of the court order and summons.
Based on the history of this matter and the chronology of events, it is evident that there was misconduct on the directors’ part and they were merely using the company to perpetuate the misconduct. The company upon obtaining the overdraft transferred the funds to one of its directors one Mohamed Bare who happens to be its majority shareholder. It then failed to repay the overdraft.
When he was called upon to be examined on the company's assets and records and to produce its books of accounts he failed to attend Court and alleged in this Replying Affidavit that he had noaccess to the said documents or records of the company. This can only imply a failure to maintain the company's records.
The Application herein is merited. By its nature it is seeking the lifting of the corporate veil even though that is not mentioned in the Application. The orders sought will however be against Mohamed Adan Bare alone who was proved to be a major shareholder and director of the company
Though Ali Noor Abdi is mentioned in the account opening forms as one of the directors of the company, the CR 12 does not include his name. The orders cannot issue against Mohamed Farah Abdi since the Application made no mention of him.
In the upshot, I proceed and make an order lifting the corporate veil of the Defendant and order that Mohamed Aden Bare pays the decretal sum of Kshs.2,449,804 /- due to the decree holder or be committed to civil jail.
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The Plaintiff shall also have the costs of their Application dated 24/4/2019.”
10. The Learned Magistrate then made the following statement regarding the Application for setting aside the default Judgment.
“I wish to make it clear that this Ruling relates to the Plaintiff's Application dated 24/4/2019. Though the Defendant submitted on this Application and their Application dated 15/3/2022, the Application dated 15/3/2022 is yet to be heard and no directions had been taken in its respect.
That Application could thus not be considered in the present Ruling.”
11. There is a second Ruling, this time dated 10/12/2021, ten days later, delivered by Hon. Muchungi , by which she dismissed Application dated 28/05/2021 seeking setting aside of the default Judgment. She thus “ lifted’ the Appellant’s “ corporate veil ” and ordered that the said Mohamed Aden Bare do pay the decretal sum which had, by then, ballooned to Kshs 2,499,804/-, or be committed to civil jail. In the Judgment, the Magistrate held as follows:
“The Defendant's director`s contention in the Application is that the postal address used does not belong to the Defendant. The Plaintiff has countered this by availing the Defendant’s account opening forms and account statement which indicate the Defendant's postal address as 68766-00622, Nairobi. This the Defendant failed to challenge. The Defendant's directors from the onset to me appear to have been intent on avoiding their legal obligation with the bank. They gave out a physical address but it seems they moved offices thereafter without informing the bank of their new location. They also gave out different postal addresses as can be seen from their documents. The Plaintiff proved that one of their postal addresses as indicated in their account documents is 68766-00622, Nairobi. Their denial that the address used to serve process is not theirs is thus mischievous and dishonest. I find that the Defendant was properly served with process and the judgment that was entered is a regular one.
To set aside or not to set aside an interlocutory judgment is a matter of Court's discretion which in any case has to be exercised judicially. The court must be given satisfactory reasons explaining why a party was unable to file their Memorandum of Appearance and Defence within the stipulated time. In the present case there is no reason given why the Defendant having been properly served failed to enter appearance and file its Defence.
The other consideration that the court looks at is whether there is a valid defence. .........................................................................................................................................
The Defendant's director herein merely stated that they have a valid defence but failed to annex a draft defence to the supporting affidavit. The court is therefore not able to assess and know whether indeed the Defendant's defence is valid and reasonable.
Lastly in David Kiptanui Yego & 134 Others v Benjamin Rono & 3 Others [2020] e KLR the court held that the discretion to set aside or vary ex-parte judgment entered in default of appearance or defence is a free one and is intended to be exerc1ses to avoid injustice or hardship out not to assist a person guilty of deliberate conduct intended to obstruct or delay the course of justice.
The Defendant's conduct in this court's view is calculated to obstruct or delay the course of
action. Upon being served with summons to enter appearance it took no steps towards defending the suit. Despite being aware of entry of judgment against it having been served with the notice it still did nothing. The director's only brought this Application when execution proceedings were taken out against the company and the Plaintiff sought to have the directors cross-examined on the assets of the company. I find no merit in the Defendant's Application dated 28/05/2021. It is hereby dismissed with costs to the Plaintiff”
12. Aggrieved by this second decision, the Appellant filed this Appeal by way of the Memorandum dated 4/12/2024, an obviously erroneous date, but which Memorandum the Judiciary Case Tracking System (CTS) online portal indicates was filed on or about 23/12/2021. The 8 grounds listed are as follows:
1. THAT the learned trial Magistrate erred in law and fact in finding that the Respondent did not have to comply with the provisions of Order 5 Rule 3 of the Civil Procedure Rules.
2. THAT the learned trial Magistrate erred in law and fact in deciding that the postal address used in the account opening forms could adequately substitute the Respondent's official postal address as registered at the Company's Registry.
3. THAT the learned Trial Magistrate failed to make a finding on whether or not there was a Return of Service on the file confirming service on either P.O. Box 68966 - 00622 the address allegedly used by the Respondent or P.O. Box 41684 Mombasa which is the official postal address of the Appellant.
4. THAT the learned trial Magistrate erred in both law and fact in failing to appreciate that the Appellant was entitled to file its Defence as a matter of right when service upon it was not proved.
5. THAT the learned trial Magistrate failed to take note of the Respondent's admission that it did not send any Summons to the Official registered postal address of the Appellant Company.
6. THAT the learned trial Magistrate failed to take note of the Respondent's admissions that there was no Return of Service on the Court file to prove service.
7. THAT the learned trial Magistrate erred in law and in fact when it found that any leave to defend would be conditional upon the Appellant providing evidence that it had a triable Defence.
8. THAT the learned trial Magistrate erred in law and in fact in failing to crucially examine the factual issues laid out in Application before the Court which established that the Respondent did not prove service upon the Appellant.
13. The parties were then given leave to file written Submissions. The Appellant, through its new Advocates, Messrs Emukule & Co. , filed the Submissions dated 20/02/2026. The Respondent, on its part, through Messrs KOMM Advocates , filed the Submissions dated 9/04/2026.
Appellant’s Submissions
14. The Appellant’s Counsel basically submitted that the purported service of the Summons was in breach of the requirements of Order 5 of the Civil Procedure Rules . He urged that it is unclear from both the proceedings o£ 6/11/2015 and the Application dated 7/10/2015, which was the proper address of the Appellant, that it can be seen from face of the Application that the address provided was “ P.O. Box 68766-00622 Nairobi ”, and that it is also strange and confusing to note that the “ P.O. Box 41684-80100 Mombasa ” was added to the Application “with a pen”. He contended that the addition of the Mombasa address was fraudulently done to defeat the cause of justice as the Affidavit sworn in support of the Application referred to the Nairobi postal address, and not the one in Mombasa. In his view, the issue of which was the proper address for the Appellant is a thorny one as both parties have submitted different addresses as the proper address, and that this raised the question whether or not the Appellant actually received the pleadings if actually they were sent. Counsel also cited various authorities in support of the various limbs of his contentions.
Respondent’s Submissions
15. On his part, the Respondent’s Counsel reiterated his arguments before the lower Court that the Application was brought in bad faith with the sole aim of scuttling the Respondent's efforts at execution and to unnecessarily protract post-judgment litigation. He continued to maintain that the Appellant's contention that it was not served with Summons is not factual, pointing out that the Court granted leave to the Respondent to serve Summons via the “ P.O. Box 68766-00622 Nairobi ”, which address is derived from the Account Opening Form and the Account Statement which were exhibited to the Affidavit, that the Appellant failed to enter appearance and a Request for Judgment was made. He thus reiterated that as such, the Judgment was regular. He also pointed out that the Appellant did not file any draft defence that raises triable issues. In the end, he contended that allowing the Application will deprive the Respondent fruits of a regular judgment. He, too, cited various authorities to buttress the various limbs of his submissions.
Determination
16. The issue for determination herein is “ whether the trial Court erred in declining to set aside the default Judgment entered against the Appellant for failure to enter appearance and file a defence .”
17. As reiterated in a plethora of cases, this being a first appellate Court, it has the duty to evaluate, re-assess and re-analyze the evidence before the trial Court, and draw its own conclusion (see for instance, the case of Kenya Ports Authority vs Kuston (Kenya) Ltd [2009] 2 EA 212 .
18. In civil litigation, matters to do with the consequences of a Defendant failing to appear or attend Court, or failing to file a defence, are governed by Order 10 of the Civil Procedure Rules . The provisions permit the entry of Judgment in default of entry of appearance or filing a defence, and sets out guidelines on the process of entry of such interlocutory judgment s. Order 10 Rule 11 then empowers the Court, in the exercise of its discretion, to set aside or vary such ex parte Judgments.
19. In an Appeal challenging exercise of discretion, the limits within which an Appellate Court can interfere were reiterated by the Supreme Court in the case of Musa Cherutich Sirma v Independent Electoral and Boundaries Commission & 2 others [2019] eKLR , as follows:
“………… we affirm that we would only interfere with the Appellate Court’s exercise of discretion if we reach the conclusion that in exercise of such discretion, the Appellate Court acted arbitrary or capriciously or ignored relevant facts or completely disregarded the principles of the governing law leading to an unjust order. Conversely, if we find that the discretion has been exercised reasonably and judiciously, then the fact that we would have arrived at a different conclusion than the Court of Appeal is not a reason to interfere with the Court’s exercise of discretion.”
20. It is trite law that a Defendant, once served with Summons, is expected to act promptly and expeditiously in entering appearance, and subsequently filing defence or answer to the claim. The time limit provided under Order 6 Rule 1 is 14 days for entering appearance, and, under Order 7 Rule 1 , another 14 days to file the defence. In the event a Defendant fails to meet the set timelines and a default judgment is entered, then he will be under a legal duty, should he wish to seek setting aside of the Judgment, to sufficiently explain the reasons why he delayed to act.
21. The Court of Appeal, in the case of Gicharu Kimani & Associates Advocates –vs- Samwel Kazungu Kambi [2020] eKLR , in restating the difference between a default Judgment regularly entered and one, which has been obtained irregularly, and the different effects flowing therefrom, held as follows:
“Considering the circumstances of this motion, the facts regarding the merits or demerits of it one must take into account in exercise of discretion that it’s within the ambit of the guiding principles laid down in the case of James Kanyiita Nderitu & Another v Marios Philotas Ghikas & Another Civil Appeal No 6 of 2015 eKLR (Msa), the Court of Appeal stated as follows:
“We shall first address the ground of appeal that faults the learned judge for setting aside the default Judgment and consequential orders in the circumstances of the case. From the outset, it cannot be gainsaid that a distinction has always existed between a default Judgment that is regularly entered and one, which is irregularly entered. In a regular default Judgment, the Defendant will have been duly served with summons to enter appearance, but for one reason or another, he had failed to enter appearance or to file defence, resulting in default Judgment. Such a Defendant is entitled, under Order 10 rule 11 of the Civil Procedure Rules, to move the 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 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 to set aside the default Judgment, among other. (See Mbogo & Another v Shah (supra), Patel v EA Cargo Handling Services Ltd {1975} EA 75, Chemwolo & Another v Kubende {1986/KLR 492 and CMC Holdings v Nzioki {2004/1 KLR 173})’.
22. Therefore, even where the Judgment is regular, the Court still retains the power to set it aside if justice of the case demands, for instance, where the Defendant shows that he has a good defence, and/or where prejudice caused may be compensated by an award of costs. This is what the Court of Appeal affirmed in the case of Tree Shade Motors Limited v D T Dobie and Company (K) Ltd and Another [1998] eKLR) . In this case, however, the Appellant denies service.
23. There is no dispute that Order 5 Rule 3(iv) of the Civil Procedure Rules allows a corporation to be served by sending Summons to its last known postal address. In this case, the Appellant contends that it was not properly served arguing that the Summons was sent to “ P.O. Box 68766-0062 Nairobi ” while its correct postal address is “ P.O. Box 41684 Mombasa ”. It is however common ground that in the Application for leave to serve via registered post, the two addresses that the Respondent presented were two, namely, “ P.O. Box 68766-0062 Nairobi ” (typed) and, “ P.O. Box 41684-00100 Mombasa ” (handwritten). While “ P.O. Box 68766-0062 Nairobi ” was derived from the Account Opening Form filled and signed by the Appellant’s representative as exhibited by the Respondent in respect to the bank account the very subject of the suit Replying Affidavit, and “ P.O. Box 41684-00100 Mombasa ” was the one appearing in the CR 12. The Application was allowed as prayed and there is no allegation that the version presented to the trial Court did not contain the handwritten addition “ P.O. Box 41684-00100 Mombasa ” or that it was sneaked in after the Application had already been allowed. The Certificate of Postage indicates that the Summons was then sent via the address “ P.O. Box 68766-0062 Nairobi ”. It is evident that the Account Opening Form from which the address “ P.O. Box 68766-0062 Nairobi ”. was derived was filled and signed by the same Mohammed Adan Barre who now purports to disown the same address he supplied. The address “ P.O. Box 68766-0062 Nairobi” was not invented by the Respondent but was supplied by the Appellant while opening the bank account. Although therefore, the address is not the one appearing in the Appellant's CR 12, it has been ably demonstrated to have been supplied by, or emanated from the Appellant. Postage of the Summons is also evidenced by the Certificate of Postage exhibited. Under the above circumstances, the trial Magistrate cannot be faulted for finding that service upon the Appellant was proper.
24. The Appellant, while applying for setting aside of the judgment, also failed to attach any draft defence to enable the Court determine whether it even had a defence that raised triable issues meriting to be canvassed at a full trial. I agree that while attaching a draft defence is standard best practice to demonstrate the existence of a viable case, Courts may entertain Applications where the defence sought to be preferred is discernible from the pleadings. However, a lack of any stated defence or demonstration of triable issues typically leads to dismissal. Under these circumstances, the trial Magistrate cannot be faulted for reaching the verdict that she did.
25. Counsel for the Respondent also correctly pointed out that that in his Supporting Affidavit, Mohammed Aden Bare deponed that the Appellant held funds in its the bank account operated at the Respondent in excess of the amount demanded by the Respondent, which funds could have been used to pay the debt. I agree with Counsel that this averment cannot amount to a defence that raises triable issues since the Appellant did not deny that it indeed overdrew the overdraft facility and has never reimbursed the same. That statement in fact amounts to an admission.
26. As also already recounted, the said Mohamed Bare disclosed that he only learnt of the suit when his own Lawyer shared with him the Summons to Enter Appearance, upon which the Lawyer, acting upon his instructions, perused the Court file and “discovered” the entry of default Judgment. He did not however disclose the dates when the Summons was shared with him, or when the Lawyer perused the Court file. As such, the Court cannot also determine whether he moved with speed to act upon learning of the suit, or whether he is guilty of inordinate delay. This is relevant because delay is another relevant factor in an Application of this nature.
27. It is trite law that where a judgement is regular, it will not be set aside as a matter of right. In that context, the Court exercises discretion, guided by set principles, on whether or not to set the judgment aside. In this case, the trial Court considered the Appellant's conduct, and whether the Appellant had any defence raising triable issues. There is therefore no material to justify my interference, as an appellate Court, with the trial Magistrate’s Court exercise of discretion merely because I may have decided the matter differently had I been sitting as the trial Court. It has not been demonstrated that the lower Court ignored relevant facts, or considered irrelevant facts, or that it made a decision that is plainly wrong.
28. In the circumstances, as this was a case of exercise of discretion by the trial Court, I find that in refusing to set aside the default Judgment, the trial Court cannot be said to have ignored relevant facts or disregarded the principles of the governing law, or that any misdirection by the trial Magistrate led to the Court perpetuating the retention of an unjust order. I therefore agree with the Respondent that no evidence has been presented to demonstrate that discretion was not properly exercised by the lower Court.
Final Orders
29. The upshot of my findings above is that this Appeal fails, and is accordingly dismissed. As costs follow the event, the Respondent is awarded costs of the Appeal.
DELIVERED, DATED AND SIGNED AT NAIROBI THIS 14 TH DAY OF AUGUST 2026
……………………..
WANANDA JOHN R. ANURO
JUDGE
Delivered in the presence of:
Mr. Emukule for the Appellant
Mr. Kiplagat for the Respondent
Court Assistant: Amos Boso
Milimani HCCOMMA/E125/2021
JUDGMENT
1. This Appeal arises from the Ruling referred to above, delivered in the said lower Court suit, in which the Appellant was the Defendant, while the Respondent was the Plaintiff. By the Ruling, the Court declined to set aside the ex parte default Judgment entered against the Appellant on 12/02/2016.
2. The background of the matter is that by the Plaint dated 23/04/2015, the Respondent, through Messrs Mulondo, Oundo, Muriuki & Co. Advocates , sought Judgment against the Appellant for a sum of Kshs 1,917,399/- plus interest and costs being monies alleged to have been overdrawn by the Defendant from its bank account held at the Plaintiff under an overdraft facility, but which amount the Defendant had failed to reimburse into the account.
3. Being unable to trace the Appellant, the Respondent was allowed to serve Summons upon the Appellant by way of registered post. Default Judgment was then entered on 12/02/2016 upon the Respondent’s Request for Judgment when no appearance nor defence was filed despite there being a Return of Service indicating that the Appellant had been served with Summons by way of registered postage via the Defendant’s postal address appearing in the CR 12 obtained from the office of the Registrar of Companies. The CR 12 also revealed the Appellant’s directors to be two - Mohamed Adan Bare and Mohammed Farah Abdi .
4. From an Affidavit on record sworn by the Respondent, there is indication that the Respondent then took out Warrants of Attachment for execution of the Decree by its Auctioneers but learnt that the Defendant had relocated to an unknown location. There is further indication that the Respondent, through its private investigators also learnt that although the Defendant was still operating, it had no attachable assets, but its directors did.
5. On the above grounds, the Respondent filed the Application dated 24/04/2019, more than 3 years after Judgment was entered whereof it applied that the Defendant’s two directors - the said Mohamed Adan Bare and a new individual named as Ali Noor Abdi - be summoned to attend Court to be examined on the whereabouts, and attachable value of the Appellant’s assets, and for “ lifting of the corporate veil ” to allow the Respondent to execute the Decree against the directors. According to the subject Affidavit of Service, the two directors were allegedly served with the Application together, at the Nakuru County Assembly on 17/10/2019. I gather from the record that the directors however failed to attend Court on several occasions leading to the order for their examination (the first part on the Application) being granted ex parte on 31/11/2020.
6. Thereafter, the said Mohammed Aden Barre , through Messrs Othieno & Co. Advocates , filed the Replying Affidavit he swore on 12/04/2021 opposing the Application for examination of directors. He deponed that he was not able to produce the Appellant’s books of accounts as the company was managed by his co-director - Mohammed Farah Abdi - and he never had access thereto. He also disclosed that he only learnt of the suit when his Lawyer shared with him the Summons to Enter Appearance, upon which the Lawyer perused the Court file and “discovered” the entry of default Judgment. He does not however disclose the dates when the Summons was shared with him, or when the Lawyer perused the Court file. He also exonerated his said co-Director, Mohammed Farah Abdi , from the allegation that he, too, was served with the Summons, urging that the person to whom the Summons was addressed via the registered post, one Ali Noor Abdi , was not a director of the Appellant. He further denied that he was served in the Nakuru, and also denied receipt of the Summons to Enter Appearance served by post earlier, and also the Notice of Entry of Judgment, pointing out that the address used to serve was “ P.O. Box 68766-00622 ”, while in the CR 12 relied on, the address disclosed is “ P.O. Box 41684-80100 Mombasa ”, and also urging that the addition, in handwriting, of the second address in the Application to serve by registered post does not override the above facts. He further contended that the postal address appearing on the Certificate of Postage produced is too faint to be read through, and thus illegible. For the said reasons, he asked the Court to stay the proceedings, and allow the Appellant to file an Application to set aside the Judgment.
7. The Court however declined to stay the examination of the directors and directed that it proceeds. The same did not however take off as the said directors again failed to attend Court on several further occasions.
8. I note that the Record of Appeal also has an Application by the Appellant dated 28/05/2021 seeking the setting aside of the default Judgment, and that the Appellant be granted leave to file a Defence. I note further that the Supporting Affidavit thereto is basically a restatement of the contents of the Replying Affidavit recounted above, and is also sworn by the same Mohamed Aden Bare . I have however not found a copy of this Application in the lower Court file.
9. There is however a copy of the Ruling 2/12/2022 in the lower Court file, but which is not included in the Record of Appeal, by which Hon. Muchungi , allowed the remaining portion of the earlier Application dated 29/04/2021. She thus “lifted’ the Defendant’s “ corporate veil ” and ordered that the said Mohamed Aden Bare do pay the decretal sum which had, by then, ballooned to Kshs 2,499,804/-, or be committed to civil jail. In the Judgment, the Magistrate held as follows:
“The Plaintiff filed the present Application and initially obtained orders to have the shareholders and directors of the Defendant summoned to attend Court to be examined on the company’s assets and to produce all its books of accounts and other documents relating to the company.
The directors failed to attend court on a number of occasions despite being aware of the court order and summons.
Based on the history of this matter and the chronology of events, it is evident that there was misconduct on the directors’ part and they were merely using the company to perpetuate the misconduct. The company upon obtaining the overdraft transferred the funds to one of its directors one Mohamed Bare who happens to be its majority shareholder. It then failed to repay the overdraft.
When he was called upon to be examined on the company's assets and records and to produce its books of accounts he failed to attend Court and alleged in this Replying Affidavit that he had noaccess to the said documents or records of the company. This can only imply a failure to maintain the company's records.
The Application herein is merited. By its nature it is seeking the lifting of the corporate veil even though that is not mentioned in the Application. The orders sought will however be against Mohamed Adan Bare alone who was proved to be a major shareholder and director of the company
Though Ali Noor Abdi is mentioned in the account opening forms as one of the directors of the company, the CR 12 does not include his name. The orders cannot issue against Mohamed Farah Abdi since the Application made no mention of him.
In the upshot, I proceed and make an order lifting the corporate veil of the Defendant and order that Mohamed Aden Bare pays the decretal sum of Kshs.2,449,804 /- due to the decree holder or be committed to civil jail.
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The Plaintiff shall also have the costs of their Application dated 24/4/2019.”
10. The Learned Magistrate then made the following statement regarding the Application for setting aside the default Judgment.
“I wish to make it clear that this Ruling relates to the Plaintiff's Application dated 24/4/2019. Though the Defendant submitted on this Application and their Application dated 15/3/2022, the Application dated 15/3/2022 is yet to be heard and no directions had been taken in its respect.
That Application could thus not be considered in the present Ruling.”
11. There is a second Ruling, this time dated 10/12/2021, ten days later, delivered by Hon. Muchungi , by which she dismissed Application dated 28/05/2021 seeking setting aside of the default Judgment. She thus “ lifted’ the Appellant’s “ corporate veil ” and ordered that the said Mohamed Aden Bare do pay the decretal sum which had, by then, ballooned to Kshs 2,499,804/-, or be committed to civil jail. In the Judgment, the Magistrate held as follows:
“The Defendant's director`s contention in the Application is that the postal address used does not belong to the Defendant. The Plaintiff has countered this by availing the Defendant’s account opening forms and account statement which indicate the Defendant's postal address as 68766-00622, Nairobi. This the Defendant failed to challenge. The Defendant's directors from the onset to me appear to have been intent on avoiding their legal obligation with the bank. They gave out a physical address but it seems they moved offices thereafter without informing the bank of their new location. They also gave out different postal addresses as can be seen from their documents. The Plaintiff proved that one of their postal addresses as indicated in their account documents is 68766-00622, Nairobi. Their denial that the address used to serve process is not theirs is thus mischievous and dishonest. I find that the Defendant was properly served with process and the judgment that was entered is a regular one.
To set aside or not to set aside an interlocutory judgment is a matter of Court's discretion which in any case has to be exercised judicially. The court must be given satisfactory reasons explaining why a party was unable to file their Memorandum of Appearance and Defence within the stipulated time. In the present case there is no reason given why the Defendant having been properly served failed to enter appearance and file its Defence.
The other consideration that the court looks at is whether there is a valid defence. .........................................................................................................................................
The Defendant's director herein merely stated that they have a valid defence but failed to annex a draft defence to the supporting affidavit. The court is therefore not able to assess and know whether indeed the Defendant's defence is valid and reasonable.
Lastly in David Kiptanui Yego & 134 Others v Benjamin Rono & 3 Others [2020] e KLR the court held that the discretion to set aside or vary ex-parte judgment entered in default of appearance or defence is a free one and is intended to be exerc1ses to avoid injustice or hardship out not to assist a person guilty of deliberate conduct intended to obstruct or delay the course of justice.
The Defendant's conduct in this court's view is calculated to obstruct or delay the course of
action. Upon being served with summons to enter appearance it took no steps towards defending the suit. Despite being aware of entry of judgment against it having been served with the notice it still did nothing. The director's only brought this Application when execution proceedings were taken out against the company and the Plaintiff sought to have the directors cross-examined on the assets of the company. I find no merit in the Defendant's Application dated 28/05/2021. It is hereby dismissed with costs to the Plaintiff”
12. Aggrieved by this second decision, the Appellant filed this Appeal by way of the Memorandum dated 4/12/2024, an obviously erroneous date, but which Memorandum the Judiciary Case Tracking System (CTS) online portal indicates was filed on or about 23/12/2021. The 8 grounds listed are as follows:
1. THAT the learned trial Magistrate erred in law and fact in finding that the Respondent did not have to comply with the provisions of Order 5 Rule 3 of the Civil Procedure Rules.
2. THAT the learned trial Magistrate erred in law and fact in deciding that the postal address used in the account opening forms could adequately substitute the Respondent's official postal address as registered at the Company's Registry.
3. THAT the learned Trial Magistrate failed to make a finding on whether or not there was a Return of Service on the file confirming service on either P.O. Box 68966 - 00622 the address allegedly used by the Respondent or P.O. Box 41684 Mombasa which is the official postal address of the Appellant.
4. THAT the learned trial Magistrate erred in both law and fact in failing to appreciate that the Appellant was entitled to file its Defence as a matter of right when service upon it was not proved.
5. THAT the learned trial Magistrate failed to take note of the Respondent's admission that it did not send any Summons to the Official registered postal address of the Appellant Company.
6. THAT the learned trial Magistrate failed to take note of the Respondent's admissions that there was no Return of Service on the Court file to prove service.
7. THAT the learned trial Magistrate erred in law and in fact when it found that any leave to defend would be conditional upon the Appellant providing evidence that it had a triable Defence.
8. THAT the learned trial Magistrate erred in law and in fact in failing to crucially examine the factual issues laid out in Application before the Court which established that the Respondent did not prove service upon the Appellant.
13. The parties were then given leave to file written Submissions. The Appellant, through its new Advocates, Messrs Emukule & Co. , filed the Submissions dated 20/02/2026. The Respondent, on its part, through Messrs KOMM Advocates , filed the Submissions dated 9/04/2026.
Appellant’s Submissions
14. The Appellant’s Counsel basically submitted that the purported service of the Summons was in breach of the requirements of Order 5 of the Civil Procedure Rules . He urged that it is unclear from both the proceedings o£ 6/11/2015 and the Application dated 7/10/2015, which was the proper address of the Appellant, that it can be seen from face of the Application that the address provided was “ P.O. Box 68766-00622 Nairobi ”, and that it is also strange and confusing to note that the “ P.O. Box 41684-80100 Mombasa ” was added to the Application “with a pen”. He contended that the addition of the Mombasa address was fraudulently done to defeat the cause of justice as the Affidavit sworn in support of the Application referred to the Nairobi postal address, and not the one in Mombasa. In his view, the issue of which was the proper address for the Appellant is a thorny one as both parties have submitted different addresses as the proper address, and that this raised the question whether or not the Appellant actually received the pleadings if actually they were sent. Counsel also cited various authorities in support of the various limbs of his contentions.
Respondent’s Submissions
15. On his part, the Respondent’s Counsel reiterated his arguments before the lower Court that the Application was brought in bad faith with the sole aim of scuttling the Respondent's efforts at execution and to unnecessarily protract post-judgment litigation. He continued to maintain that the Appellant's contention that it was not served with Summons is not factual, pointing out that the Court granted leave to the Respondent to serve Summons via the “ P.O. Box 68766-00622 Nairobi ”, which address is derived from the Account Opening Form and the Account Statement which were exhibited to the Affidavit, that the Appellant failed to enter appearance and a Request for Judgment was made. He thus reiterated that as such, the Judgment was regular. He also pointed out that the Appellant did not file any draft defence that raises triable issues. In the end, he contended that allowing the Application will deprive the Respondent fruits of a regular judgment. He, too, cited various authorities to buttress the various limbs of his submissions.
Determination
16. The issue for determination herein is “ whether the trial Court erred in declining to set aside the default Judgment entered against the Appellant for failure to enter appearance and file a defence .”
17. As reiterated in a plethora of cases, this being a first appellate Court, it has the duty to evaluate, re-assess and re-analyze the evidence before the trial Court, and draw its own conclusion (see for instance, the case of Kenya Ports Authority vs Kuston (Kenya) Ltd [2009] 2 EA 212 .
18. In civil litigation, matters to do with the consequences of a Defendant failing to appear or attend Court, or failing to file a defence, are governed by Order 10 of the Civil Procedure Rules . The provisions permit the entry of Judgment in default of entry of appearance or filing a defence, and sets out guidelines on the process of entry of such interlocutory judgment s. Order 10 Rule 11 then empowers the Court, in the exercise of its discretion, to set aside or vary such ex parte Judgments.
19. In an Appeal challenging exercise of discretion, the limits within which an Appellate Court can interfere were reiterated by the Supreme Court in the case of Musa Cherutich Sirma v Independent Electoral and Boundaries Commission & 2 others [2019] eKLR , as follows:
“………… we affirm that we would only interfere with the Appellate Court’s exercise of discretion if we reach the conclusion that in exercise of such discretion, the Appellate Court acted arbitrary or capriciously or ignored relevant facts or completely disregarded the principles of the governing law leading to an unjust order. Conversely, if we find that the discretion has been exercised reasonably and judiciously, then the fact that we would have arrived at a different conclusion than the Court of Appeal is not a reason to interfere with the Court’s exercise of discretion.”
20. It is trite law that a Defendant, once served with Summons, is expected to act promptly and expeditiously in entering appearance, and subsequently filing defence or answer to the claim. The time limit provided under Order 6 Rule 1 is 14 days for entering appearance, and, under Order 7 Rule 1 , another 14 days to file the defence. In the event a Defendant fails to meet the set timelines and a default judgment is entered, then he will be under a legal duty, should he wish to seek setting aside of the Judgment, to sufficiently explain the reasons why he delayed to act.
21. The Court of Appeal, in the case of Gicharu Kimani & Associates Advocates –vs- Samwel Kazungu Kambi [2020] eKLR , in restating the difference between a default Judgment regularly entered and one, which has been obtained irregularly, and the different effects flowing therefrom, held as follows:
“Considering the circumstances of this motion, the facts regarding the merits or demerits of it one must take into account in exercise of discretion that it’s within the ambit of the guiding principles laid down in the case of James Kanyiita Nderitu & Another v Marios Philotas Ghikas & Another Civil Appeal No 6 of 2015 eKLR (Msa), the Court of Appeal stated as follows:
“We shall first address the ground of appeal that faults the learned judge for setting aside the default Judgment and consequential orders in the circumstances of the case. From the outset, it cannot be gainsaid that a distinction has always existed between a default Judgment that is regularly entered and one, which is irregularly entered. In a regular default Judgment, the Defendant will have been duly served with summons to enter appearance, but for one reason or another, he had failed to enter appearance or to file defence, resulting in default Judgment. Such a Defendant is entitled, under Order 10 rule 11 of the Civil Procedure Rules, to move the 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 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 to set aside the default Judgment, among other. (See Mbogo & Another v Shah (supra), Patel v EA Cargo Handling Services Ltd {1975} EA 75, Chemwolo & Another v Kubende {1986/KLR 492 and CMC Holdings v Nzioki {2004/1 KLR 173})’.
22. Therefore, even where the Judgment is regular, the Court still retains the power to set it aside if justice of the case demands, for instance, where the Defendant shows that he has a good defence, and/or where prejudice caused may be compensated by an award of costs. This is what the Court of Appeal affirmed in the case of Tree Shade Motors Limited v D T Dobie and Company (K) Ltd and Another [1998] eKLR) . In this case, however, the Appellant denies service.
23. There is no dispute that Order 5 Rule 3(iv) of the Civil Procedure Rules allows a corporation to be served by sending Summons to its last known postal address. In this case, the Appellant contends that it was not properly served arguing that the Summons was sent to “ P.O. Box 68766-0062 Nairobi ” while its correct postal address is “ P.O. Box 41684 Mombasa ”. It is however common ground that in the Application for leave to serve via registered post, the two addresses that the Respondent presented were two, namely, “ P.O. Box 68766-0062 Nairobi ” (typed) and, “ P.O. Box 41684-00100 Mombasa ” (handwritten). While “ P.O. Box 68766-0062 Nairobi ” was derived from the Account Opening Form filled and signed by the Appellant’s representative as exhibited by the Respondent in respect to the bank account the very subject of the suit Replying Affidavit, and “ P.O. Box 41684-00100 Mombasa ” was the one appearing in the CR 12. The Application was allowed as prayed and there is no allegation that the version presented to the trial Court did not contain the handwritten addition “ P.O. Box 41684-00100 Mombasa ” or that it was sneaked in after the Application had already been allowed. The Certificate of Postage indicates that the Summons was then sent via the address “ P.O. Box 68766-0062 Nairobi ”. It is evident that the Account Opening Form from which the address “ P.O. Box 68766-0062 Nairobi ”. was derived was filled and signed by the same Mohammed Adan Barre who now purports to disown the same address he supplied. The address “ P.O. Box 68766-0062 Nairobi” was not invented by the Respondent but was supplied by the Appellant while opening the bank account. Although therefore, the address is not the one appearing in the Appellant's CR 12, it has been ably demonstrated to have been supplied by, or emanated from the Appellant. Postage of the Summons is also evidenced by the Certificate of Postage exhibited. Under the above circumstances, the trial Magistrate cannot be faulted for finding that service upon the Appellant was proper.
24. The Appellant, while applying for setting aside of the judgment, also failed to attach any draft defence to enable the Court determine whether it even had a defence that raised triable issues meriting to be canvassed at a full trial. I agree that while attaching a draft defence is standard best practice to demonstrate the existence of a viable case, Courts may entertain Applications where the defence sought to be preferred is discernible from the pleadings. However, a lack of any stated defence or demonstration of triable issues typically leads to dismissal. Under these circumstances, the trial Magistrate cannot be faulted for reaching the verdict that she did.
25. Counsel for the Respondent also correctly pointed out that that in his Supporting Affidavit, Mohammed Aden Bare deponed that the Appellant held funds in its the bank account operated at the Respondent in excess of the amount demanded by the Respondent, which funds could have been used to pay the debt. I agree with Counsel that this averment cannot amount to a defence that raises triable issues since the Appellant did not deny that it indeed overdrew the overdraft facility and has never reimbursed the same. That statement in fact amounts to an admission.
26. As also already recounted, the said Mohamed Bare disclosed that he only learnt of the suit when his own Lawyer shared with him the Summons to Enter Appearance, upon which the Lawyer, acting upon his instructions, perused the Court file and “discovered” the entry of default Judgment. He did not however disclose the dates when the Summons was shared with him, or when the Lawyer perused the Court file. As such, the Court cannot also determine whether he moved with speed to act upon learning of the suit, or whether he is guilty of inordinate delay. This is relevant because delay is another relevant factor in an Application of this nature.
27. It is trite law that where a judgement is regular, it will not be set aside as a matter of right. In that context, the Court exercises discretion, guided by set principles, on whether or not to set the judgment aside. In this case, the trial Court considered the Appellant's conduct, and whether the Appellant had any defence raising triable issues. There is therefore no material to justify my interference, as an appellate Court, with the trial Magistrate’s Court exercise of discretion merely because I may have decided the matter differently had I been sitting as the trial Court. It has not been demonstrated that the lower Court ignored relevant facts, or considered irrelevant facts, or that it made a decision that is plainly wrong.
28. In the circumstances, as this was a case of exercise of discretion by the trial Court, I find that in refusing to set aside the default Judgment, the trial Court cannot be said to have ignored relevant facts or disregarded the principles of the governing law, or that any misdirection by the trial Magistrate led to the Court perpetuating the retention of an unjust order. I therefore agree with the Respondent that no evidence has been presented to demonstrate that discretion was not properly exercised by the lower Court.
Final Orders
29. The upshot of my findings above is that this Appeal fails, and is accordingly dismissed. As costs follow the event, the Respondent is awarded costs of the Appeal.
DELIVERED, DATED AND SIGNED AT NAIROBI THIS 14 TH DAY OF AUGUST 2026
……………………..
WANANDA JOHN R. ANURO
JUDGE
Delivered in the presence of:
Mr. Emukule for the Appellant
Mr. Kiplagat for the Respondent
Court Assistant: Amos Boso
Milimani HCCOMMA/E125/2021