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Court of AppealDismissedCivil Appeal No. 228 of 1995· [1997] KECA 337 (KLR)

Kemipharma (kenya) Limited & 2 others v Novo Industri A/s

Court of Appeal of Kenya
11 July 1997
1,206 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that ignoring a served summons leads to a default judgment you likely cannot reverse, and foreign currency decrees convert at the payment-date rate.

What this practically means

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Executive summary

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The respondent, Novo Industri A/S, sued Kemipharma (Kenya) Ltd and its two directors for goods sold and delivered between 1985 and 1987. The company admitted the debt and offered payment by instalments, whereupon the second and third defendants executed a guarantee in February 1989. Despite being served, the defendants neither entered appearance nor filed a defence, and default judgment was entered in August 1990 for US$214,259.03 and Swedish Kronors 98,774.11. More than two years later they applied to set aside the judgment, alleging they had been misled by the plaintiff's advocate, Mr Omwela, into believing no defence was necessary, and complaining that the decree lacked a rate of exchange. Ole Keiwua J dismissed the application on 19 May 1994, granting a stay of execution. The Court of Appeal (Kwach, Akiwumi and Pall JJA) unanimously dismissed the appeal. It found the default judgment regular since the defendants had been served and chosen not to defend; the commission claim was inconsistent with the guarantee, the instalment scheme and the admissions in correspondence; and the allegation of being misled was disbelieved. On the exchange-rate point, the court endorsed the rule, drawn from Beluf Establishment v Attorney-General and the English decisions in Milliangos and Despina R, that judgment may be expressed in foreign currency convertible at the rate prevailing on the date of payment or enforcement. The appeal was dismissed with costs, the stay of execution was vacated, and the money held in joint accounts was ordered released to the plaintiff forthwith.

Key legal issues

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01

Setting aside default judgment

Holding

The appeal against refusal to set aside the default judgment fails; the defendants were served, admitted the debt, offered instalments and made payments, so there was no triable issue and no credible claim of being misled.

Reasoning

The court examined the ten grounds of appeal and found them without merit. The third defendant had met the plaintiff's advocate, promised and made payments, and returned the summons. Any commission claim could have been raised then; the guarantee made no reference to commission; an instalment scheme was inconsistent with a denial of the debt; and correspondence contained a clear admission. The judge's finding that the defendants were not misled was sound.

p. 2
02

Foreign currency judgments and rate of exchange

Holding

A decree expressed in foreign currency is not vague for failing to specify a rate of exchange; conversion is at the rate prevailing on the date of payment or enforcement.

Reasoning

Relying on Akiwumi JA's earlier unreported decision in Beluf Establishment v Attorney-General, which itself drew on the English decisions in Milliangos and Despina R, the court endorsed the rule that the conversion date is when payment is made or judgment enforced, making a decree in foreign currency certain without an stated exchange rate.

p. 2

Legal principles established

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  • A regular default judgment entered after proper service will not be set aside where the defendant, though served, chose not to appear or defend; allegations of being misled by the plaintiff's advocate must be credible and are assessed on the evidence.
  • Kenyan courts applying the common law may, in proper cases, express judgment in foreign currency convertible at the rates prevailing on the date of payment or enforcement of the judgment.

Court orders

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  1. 1.Appeal dismissed with costs
  2. 2.Stay of execution pending appeal granted by the learned Judge on 19th May, 1994 vacated
  3. 3.Money held in joint accounts to be released to the plaintiff forthwith
On appeal from
High Court of Kenya at Nairobi
Civil Case No. 2250 of 1990
Jurisdiction invoked
First appellate jurisdiction over the High Court under the Constitution and the Civil Procedure Act (appeal from an order of the High Court dated 19 May 1994)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kemipharma (kenya) Limited & 2 others v Novo Industri A/s", Case Analysis (1997). Civil Appeal No. 228 of 1995. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1997/337/eng@1997-07-11

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.