KAYS INVESTMENTS LIMITED v THRIFT HOMES LIMITED [2007] KECA 90 (KLR)
The bottom line
#Kenya's Court of Appeal set aside a default judgment because the dispute raised genuine triable issues, but ordered the negligent advocate to personally pay the resulting costs.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the Court of Appeal should interfere with the exercise of discretion by Githinji J in refusing to set aside an interlocutory judgment entered in default of appearance
- 2.Whether the learned Judge misdirected himself in finding that the advocate's explanation for delay showed no excusable mistake, inadvertence or error
- 3.Whether the draft defence disclosed genuine triable issues to the claim for specific performance of the sale agreement, particularly regarding the completion date
- 4.Whether the failure of the application to include a prayer for leave to file defence rendered it fatally defective
Key legal issues
#Principles governing interference with a judge's exercise of discretion on appeal
The Court declined to disturb the Judge's finding that the advocate's explanation for delay was not candid and showed no excusable mistake, since on the facts there was a proper basis for that conclusion.
The Court restated the Mbogo v Shah and Newbold P principles that an appellate court interferes with discretion only where the judge misdirected himself, acted on wrong matters, or was clearly wrong resulting in misjustice. Although the Court might have been more charitable to Mr. Mbugua, each case must be decided on its own peculiar facts and an appellate court cannot substitute its discretion for that of the judge below.
Whether the draft defence disclosed triable issues on the completion date
The Judge misdirected himself in treating the sale agreement as governed by the Law Society conditions of sale; the express terms of the agreement prevailed, raising a bona fide triable issue that could not be resolved on conflicting affidavit evidence in interlocutory proceedings.
The agreement expressly provided that the LSK conditions applied only insofar as they were not inconsistent with the express terms agreed by the parties. The completion provisions were express terms in clause 5 and Special Condition No. 2. Whether completion occurred by the contractual date depended on construction of the agreement and conflicting affidavit evidence, and could not be determined with finality at interlocutory stage.
Whether the absence of a prayer for leave to file defence rendered the set-aside application fatally defective
The omission was not fatal; setting aside the interlocutory judgment necessarily reverts the parties to the stage where the defence was due, and terms under Order IXA r 10 may include extension of time, compensation in costs or preservatory orders whether requested or not.
Courts do not act in vain. The intention of the application was to regularise the pleadings. The wide discretion under Order IXA r 10 to set aside a default judgment 'upon such terms as are just' permits the court to impose such consequential terms as extension of time to file a defence, costs, or preservatory orders, even where not expressly prayed for.
Scope of the discretion under Order 9A r 10 to set aside default judgment
The discretion is unlimited, having been freed of the 'sufficient cause' stricture by Legal Notice 66/73, but must be exercised justly and not arbitrarily; where judgment was entered regularly, an affidavit of merits showing a prima facie defence is required.
Drawing on Chemwono v Kubende, Patel v EA Cargo Handling Services, Mbogo v Shah, Evans v Bartlam and Sebei District Administration v Gasyali, the Court held the main concern is to do justice between the parties; the reasons for default are a relevant consideration but no rigid rule bars setting aside, and whether triable issues exist is primarily important.
Legal principles established
#- An appellate court will not interfere with the exercise of discretion by a lower court unless the decision is clearly wrong, based on misdirection, reliance on wrong matters, or failure to consider relevant matters resulting in a wrong conclusion.
- Order 9A rule 10 confers an unlimited discretion on the court to set aside a default judgment upon such terms as are just, but that discretion cannot be exercised arbitrarily, on whim or caprice.
- A triable issue arising from the construction of a contract that depends on conflicting affidavit evidence cannot be determined with finality in interlocutory proceedings.
- The omission of a prayer for leave to file a defence in an application to set aside an interlocutory judgment does not render the application fatally defective, since the filing of a defence is the logical and inevitable consequence of setting aside such a judgment.
Court orders
#- 1.Appeal allowed and the orders of the superior court made on 16th May 2000 set aside
- 2.Notice of motion dated 1st October 1998 allowed with the consequence that the interlocutory judgment entered against the appellants is set aside
- 3.Appellants to file and serve their defence in the superior court, if any, within 14 days of the judgment
- 4.Mr. Joseph Njoroge Mbugua, Advocate to pay to the respondents all costs thrown away in the court below
- 5.Mr. Mbugua to pay party and party costs in the appeal
- 6.Order for injunction in place pending hearing and determination of the suit in the superior court not disturbed
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 1512 of 1998
- Jurisdiction invoked
- First appeal to the Court of Appeal against a ruling of the High Court (discretionary interlocutory ruling), pursuant to the appellate jurisdiction of the Court of Appeal
Relief refused
#Interference with the learned Judge's finding that the advocate's explanation for delay lacked candour and showed deliberate inaction
On the facts there was a proper basis for the Judge's conclusion; the Court cannot substitute its own discretion for that of the Judge below
Costs
Mr. Joseph Njoroge Mbugua, Advocate, to pay the respondents all costs thrown away in the court below and party and party costs in the appeal.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In the result we allow the appeal and set aside the orders of the superior court made on 16th May, 2000. We substitute therefor an order allowing the notice of motion dated 1st October, 1998 with the consequence that the interlocutory judgment entered against the appellants (the defendants in the main suit) shall be and is hereby set aside.
The appellants shall file and serve their defence in the superior court, if any, within 14 days of this judgment.
that wish is granted and we order that Mr. Mbugua shall pay to the respondents all costs thrown away in the court below. He will also pay party and party costs in the appeal.
Finally we do not disturb the order for injunction which both parties inform us is in place pending the hearing and determination of the suit before the superior court.
In our view there is a bona fide triable issue in that respect which cannot be resolved on conflicting affidavit evidence and we think it was erroneous for such issue to be determined with finality in interlocutory proceedings as the learned Judge purported to do.
For good order and accountability however, it cannot do so arbitrarily or on whim or caprice.
I think it should always be remembered that to deny the subject a hearing should be the last resort of a court
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "KAYS INVESTMENTS LIMITED v THRIFT HOMES LIMITED [2007] KECA 90 (KLR)", Case Analysis (2007). Civil Appeal 210 of 2002. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/90/eng@2007-07-13
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.