(Being an appeal from the Ruling delivered on 15th September 2023 by the Adjudicator/Magistrate Hon. Gatambia Ndungu in Mombasa Small Claims Court Claim No. E205 of 2023)
MEMORANDUM OF APPEAL
- KENYA ORIENT INSURANCE LIMITED the appellant herein filed this appeal against the respondent on the ruling delivered on 15.9.23 on the following grounds: -
a.That the learned adjudicator erred in law and in fact by failing to hold that a declaratory suit as our instant case cannot be subject of an interlocutory judgment hence the judgment on record was irregular.
- That the learned adjudicator erred in law and fact in holding that service of summons/ 1st mention notice upon appellant has been proved.
- That the learned adjudicator erred in law and in fact by relying on uncertified electronic printouts as evidence of service contrary to the Law and established legal precedents.
- That the learned adjudicator erred in law and in fact by relying on secondary evidence as proof of service contrary to the law.
- That the learned trial adjudicator erred in law and in fact in failing to hold that the Appellant’s response to statement of claim raised no triable issues.
- That the learned adjudicator erred in law and in fact by applying the wrong principles of law, taking into account irrelevant factors and leaving out of account some relevant factors hence erroneously dismissed the application dated 21st July 2023.
REASONS WHEREOF: The appellant prays that the appeal be allowed and the following orders do issue:
- The learned Adjudicator Ruling delivered on 15th September 2023 I Mombasa Small Claims Court Civil Case Number E205 of 2023, Babra Ayieko vs Kenya Orient Insurance Company Limited be set aside and be replaced with an order directing that this suit be heard on its own merits.
- Costs of this appeal.
2, This is a first appellate court and the duty of this court is to re-evaluate the entire evidence on record and arrive at its own conclusion bearing in mind that it did not have an opportunity to see the witnesses as was held in the case of Abok James Odera T/A A.J Odera & Associates v John Patrick Machira T/A Machira & Co. Advocates [2013] eKLR.
3.The facts of this case are that the respondent moved the Small claims court Mombasa Seeking declaration that the appellant was obligated to satisfy a decree in the sum of Kshs . 180,550/= issued in Mombasa SCC NO 136 OF 2022 . It is alleged by respondent who was the claimant in the original small claims case that the appellant insured the motor vehicle owned by Joseph Kimani Chege ( the respondent in the said SCC) . The appellant failed to satisfy the said decree and hence the respondent filed the declaratory suit no. Mombasa SCC no. E205 of 2023 which has given rise to the appeal herein. Judgment in default of appearance and defence was sought for by the respondent herein and the same was entered on 22.5.23.
3. The appellant thereafter filed application dated 21.7.23 seeking setting aside of the default judgment on the grounds that it was not served with the statement of claim , that default judgment cannot be entered on a declaratory suit , that the appellant is not obligated to satisfy the claim in the primary suit by virtue of Section 5 and 10 of the Insurance (Third party Risks) Act . also that the appellant had not insured the motor vehicle by 2.10.21 when the accident occurred. Further the claim was filed on 20.4.23 while service was said to have been served on 26.4.23. also that the time for filing their response would have ended on 10.5.23 yet the mention was set for 8.5.23 . it stated that the service under order 5 rule 22C of the CPR only comes into play when personal service cannot be effected . further that the appellant did not enter appearance and hence the interlocutory judgment was entered .
4. The respondent filed a replying affidavit dated 31.8.23 , in which it denied all the allegations in the application and said that the appellant came to court to unclean hands and the application is merely meant to delay the enjoyment of the fruits of the judgment by the respondent . Also that the appellant was duly served by the process server and the advocate and so service was proper. She said that the error pointed by the appellant was a typing error. It was the respondent’s contention that she complied with the requirement for service under section 25 of the Small claims Court Act and that the draft response raised no triable issues .
5. The appellant submitted that , the court has wide discretion to set aside default judgment as was held in the cited case of Patriotic Guards Limited vs James Kipchirchir Sambu [2018] eKLR whether the court held in relation to interference with discretion that :
“...It is settled law that whenever a court is called upon to exercise its discretion, it must do so judiciously and not on caprice, whim, likes or dislikes. Judicious because the discretion to be exercised is judicial power derived from the law and as opposed to a judge’s private affection or will. Being so, it must be exercised upon certain legal principles and according to the circumstances of each case and the paramount need by court to do real and substantial justice to the parties in a suit.”
according to the circumstances of each case and the paramount need by court to do real and substantial justice to the parties in a suit.”
6. Appellant submitted that order 10 rule 11 of CPR provides for setting aside of irregular judgment . Order 10 Rule 11 of the Civil Procedure Rules which provides:
"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.",
The appellant also cited the case of Pithon Waweru Maina vs Thuka Mugiria (1982-88) I KAR 171 where it was held that :
"(a)Firstly, there are no limits or restrictions on the judge’s discretion except that if he does vary the judgment he does so on such terms as may be just ... 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 it by the rules. Patel vs EA Cargo Handling Services . Ltd [1974] EA 75 at 76 C and E (b) Secondly, this discretion is intended so to be exercised to avoid injustice or hardship resulting from accident, inadvertence, or excusable mistake or error, but is not designed to assist the person who has deliberately sought, whether by evasion or otherwise, to obstruct or delay the course of justice. Shah vs Mbogo [1967] EA 116 at 123B, Shabir Din vs Ram Parkash Anand (1955) 22 EACA
48. (c) Thirdly the Court of Appeal should not interfere with the exercise of the discretion of a judge unless it is satisfied that the judge in exercising his discretion has misdirected himself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge has been clearly wrong in the exercise of his discretion and that as a result there has been misjustice. Mbogo vs Shah [1968] EA 93."
In the case of Kimani vs McConmell [1966] EA 545 this Court emphasized that 'all facts and circumstances both prior and subsequent and of the respective merits of the parties' ought to be considered.
Also the case of James Kanyiita Nderitu & Another -vs- Marios Philotas Ghikas & Another [2016]eKLR, where the Court of Appeal stated that;
“From the outset, it cannot be gain-said that a distinction has always existed between a default judgement that is regularly entered and one which is irregularly entered. In a regular default judgment, the defendant will have been duly summons 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 default judgment, and will take into account such factors as the reason for 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 and whether on the whole it is in the interest of justice to set aside the default judgment, among others….”
7. The appellant submitted that an interlocutory judgment cannot be entered in a declaratory suit as was held in the case of Fidelity insurance vs Hussein M Ali vs Cresent Service station 2015 eKLR and Kenya Commercial Bank vs Joshua Aggrey Aburi (2001) eKLR
8. The respondent submitted that the claim was settled by the appellant before filling of this appeal and thus the appeal had been rendered nugatory . The case of Brinks met ltd vs Elcomba 1988 ALL CA 188 was cited to support this point. She accused the appellant of non -disclosure of material facts as to settlement of the claim . also that the appeal not meet the threshold of setting aside of interlocutory judgment . further that the appellant was properly served with summons to enter appearance and the claim under order 5 rule 22B of the CPR .
9. I have carefully re-evaluated the entire evidence of record and the issues for determination are as follows;
- Whether the claim was fully settled . Whether the small claims court has jurisdiction to hear a declaratory suit .
- Whether the appellant was served with the claim and 1st mention notice .
- Whether the interlocutory judgment can be entered in a declaratory suit.
- Whether the learned trial magistrate relied on irrelevant factors and ignored relevant factors.
10. On whether the claim was fully settled by the appellant, the respondent submitted that the appellant fully settled the claim before filling of the appeal and thus the appeal has been rendered nugatory. It is trite law that he who alleges must prove under section 109 of the law of Evidence Act. This is not controverted , however no evidence of the payment cheque was filed by respondent to show that the claim was fully settled as alleged. I proceed to dismiss the allegation of settlement as it is unsubstantiated .
11. On whether small claims court has jurisdiction to hear and determine a declaratory suit. The appellant argued that the small claims court did not have jurisdiction to try a declaratory suit . The respondent did not reply to this issue Section 12 of the Small Claims Act provides that ‘’
(1) | Subject to this Act, the Rules and any other law, the Court has jurisdiction to determine any civil claim relating to—
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‘’ . There is no place for a declaratory suit under Section 12 (1) of the Act which is plain and clear . It is thus clear that it was not the intention of legislature to clothe the Small Claims Courts with jurisdiction to hear and determine declaratory suits .The Small claims court has no jurisdiction to try declaratory suits.
12. On whether the appellant was served with the statement of claim and the 1st mention notice , the appellant argued that same were not served upon it while the respondent’s case is that the appellant was served with the same on 26.4.23 by the advocate and George Odhiambo Odero the court process server as per the affidavit of the process server filed herein dated 28.4.23 and certificate of service by Zebinar Mwangi advocate. The respondent took issue with the service saying that the email on the return of service does not belong to it while the respondent said that it was email of appellant obtained from its Website . Further that the website was for appellants Mombasa office. indicating that appellant was served via email . the trial court in its ruling found that the default judgment was entered upon the court being satisfied that service was properly effected . I have seen the said return of service by the process server and noted that the email address used there in is the same one listed for their Mombasa office in its website . the service was said to have been effected under Order 5 rule 22 B & C of the Civil procedure rules . Rule 22 B provides for service by last known email address of the defendant while Rule 22 B provides for service by mobile enable text messaging . These are acceptable modes of service of court summons to enter appearance among other documents . The return of service indicates that the service was effected on 26.3.23 but upon careful perusal of the annexed email receipt it show it was received on 26.4.23 as per the affidavit of the server. The respondent indicated that this was a mistake in typing and I agree with the said explanation as the mistake was caused by human error which is curable under Article 159 of the constitution of Kenya . It is clear herein from the affidavit of service that the appellant was properly served through it’s last known email address under order 5 Rule 22 B of the CPR .
13. On whether interlocutory judgment can be entered in a declaratory suit . it is trite law that interlocutory judgment is only entered in suits where the claim is liquidated and not unliquidated claims . Order 10 Rule 4 (1) and (2) of the Civil Procedure Rules, 2010 which provide as follows:
“4(1) Where the plaint makes a liquidated demand only and the defendant fails to appear on or before the day fixed in the summons or all the defendants fail so to appear, the court shall, on request in Form No. 13 of Appendix A, enter judgment against the defendant or defendants for any sum not exceeding the liquidated demand together with interest thereon from the filing of the suit, at such rate as the court thinks reasonable, to the date of the judgment, and costs.
(2) Where the plaint makes a liquidated demand together with some other claim, and the defendant fails, or all the defendants fail, to appear as aforesaid, the Court shall, on request in Form No. 13 of Appendix A, enter judgment for the liquidated demand and interest thereon as provided by sub-rule (1) but the award of costs shall await judgment upon such other claim.
Order 10 Rules 9 and 10 thereof which provide:
(9) Subject to rule 4, in all suits not otherwise specifically provided for by this Order, where any party served does not appear the plaintiff may set down the suit for hearing.
(10) The provisions of rules 4 – 9 inclusive shall apply with any necessary modification where any defendant has failed to file a defence.”
, Order 10, rule 11 of the Civil Procedure Rules, provides for setting aside of ex-parte interlocutory judgment to wit :
“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.”
14. A declaratory suit is unliquidated by nature and thus an interlocutory judgment cannot be entered on it and the suit ought to have been fixed for formal proof . In the case of Fredrick Nyagari Nyaribo v Housing Finance [2015] eKLR justice Thuranira held that ‘’ On whether the interlocutory judgment was irregularly entered, it is observed that the prayers in the plaint are for declaratory and injunctive orders. The applicable law is therefore Order 10 Civil Procedure Rules and specifically Rule 9 and 10 ……
The interlocutory judgment was therefore irregularly entered. The suit ought to have been set down for hearing.’’
15. The interlocutory judgment was therefore irregular . It is trite law that the trial court has discretion to set aside regular judgment on such conditions that it deems fit but where the judgment is irregular then the same must be set aside unconditionally . In the case of Pithon Waweru Maina vs Thuka Mugiria (1982-88) I KAR 171 here it was held that "(a)Firstly, there are no limits or restrictions on the judge’s discretion except that if he does vary the judgment he does so on such terms as may be just ... 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 it by the rules. Patel vs EA Cargo Handling Services . Ltd [1974] EA 75 at 76 C and E (b) Secondly, this discretion is intended so to be exercised to avoid injustice or hardship resulting from accident, inadvertence, or excusable mistake or error, but is not designed to assist the person who has deliberately sought, whether by evasion or otherwise, to obstruct or delay the course of justice. Shah vs Mbogo [1967] EA 116 at 123B, Shabir Din vs Ram Parkash Anand (1955) 22 EACA
48. (c) Thirdly the Court of Appeal should not interfere with the exercise of the discretion of a judge unless it is satisfied that the judge in exercising his discretion has misdirected himself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge has been clearly wrong in the exercise of his discretion and that as a result there has been misjustice. Mbogo vs Shah [1968] EA 93."
16. The trial magistrate had wide discretion to set aside the said irregular judgment unconditionally in the interest of justice and to avoid hardship to the appellant but erred in failing to do so .
17. I thus need not go into whether the draft statement of defence raises triable issues .
18. On whether this court should interfere with the said discretion of the learned trial magistrate in failing to set aside the interlocutory judgment, I bear in mind that an appellate court cannot interfere with discretionary orders of a trial court unless it is satisfied that it is made in the interest of justice and that the trial court misdirected its self on an issue in question and arrived at a wrong discretion . In this case, it is clear that the learned Trial Magistrate misdirected himself in failing to appreciate that interlocutory judgment cannot be entered where a claim is unliquidated and that it had no jurisdiction to deal with the declaratory suit and thus an injustice was caused to the appellant . it is thus in the interest of justice that I interfere with the said discretion .
19. In the upshot the appeal is allowed on the following terms ;
- Interlocutory judgment dated 22.5.23 and all the consequential orders are set aside as it was irregular.
- Mombasa Small Claims Court Claim No. E205 of 2023 is struck out for want of jurisdiction.
- Each party to bear its own costs of the appeal
DELIVERED VIRTUALLY VIA TEAMS PLATFORM ON THIS DAY OF 2024 IN THE PRESENCE OF
COURT ASISITANT : OWIWA
FOR APPELLANT ‘FOR RESPODENT