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Court of AppealAllowedNairobi HCCC No. 289 of 2015 (appeal therefrom)

Velos Enterprises Limited v Paragon Electronics LTD & 3 others (Civil Appeal 274 of 2018) [2026] KECA 1273 (KLR)

Court of Appeal of Kenya
3 July 2026
6,823 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~27 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal set aside a default judgment worth millions, ruling that quantified damage claims still need evidence in court before they become enforceable.

What this practically means

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Executive summary

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This was a first appeal to the Court of Appeal from a ruling of the High Court at Milimani (Sergon, J.) dated 11th May 2018 declining to set aside an ex parte judgment entered against Velos Enterprises Limited on 26th October 2015 in favour of Paragon Electronics Limited, Techno Service Limited and Get Mobile Limited, who claimed damages for an illegal attachment and conversion of goods. The ex parte judgment was precipitated into question when the respondents initiated garnishee proceedings, prompting the appellant's application under Order 10 rule 11 to set it aside, on grounds including the filing of a defence (albeit two days late and by a firm not properly on record), the non-liquidated nature of the claim, and the right to a fair hearing. The Court of Appeal framed four subsidiary issues: whether Oraro & Co. Advocates were properly on record; whether the defence was properly on record; whether the default judgment was regular; and whether the claim was liquidated. The Court held that the judgment was a regular default judgment, settable aside only in the court's discretion; that the claim, being for unquantified damages, was not liquidated and required formal proof; and that given mutual non-compliance by both sides with the change-of-advocates rules, the trial court was under a duty to consider the defence on record. The Court found the trial judge had wrongly exercised his discretion, allowed the appeal, set aside the High Court ruling, allowed the application of 31st July 2017, and directed that each party bear its own costs of the appeal given the 'comedy of errors' in representation by all parties.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the trial court properly exercised its discretion in declining to set aside the ex parte judgment entered on 26th October 2015
  2. 2.Whether the firm of Oraro & Company Advocates was properly on record for the appellant
  3. 3.Whether the appellant's statement of defence was properly on record and ought to have been considered by the court
  4. 4.Whether the ex parte judgment entered on 26th October 2015 was regular in the circumstances of the case
  5. 5.Whether the respondents' claim was for liquidated damages not requiring formal proof

Key legal issues

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01

Regularity of the ex parte judgment

Holding

The ex parte judgment was a regular default judgment because the appellant had been served, had entered appearance twice, and had filed a defence, albeit two days late; it could therefore only be set aside at the court's discretion, not ex debito justitiae.

Reasoning

The court adopted the James Kanyiita Nderitu distinction between regular and irregular default judgments. An irregular judgment, entered against an unserved defendant, is set aside as of right and the court may act suo moto; a regular judgment, entered against a served defendant in default, engages the court's discretion under Order 10 rule 11, considering the reason for default, delay, triable issues, prejudice and the interest of justice.

p. 10
02

Liquidated claim and formal proof

Holding

The respondents' claim for damages arising from illegal attachment and conversion was not a liquidated demand; formal proof was required, and the trial court erred in holding otherwise.

Reasoning

Applying the Cimbria East Africa definition accepted in Postal Corporation of Kenya, a claim does not become liquidated simply because it is quantified. The amounts pleaded represented values placed on goods allegedly carted away and premises damaged; ascertaining them required the respondents to adduce evidence by way of formal proof, which was not done. Final judgment without formal proof was therefore erroneous.

p. 11
03

Consideration of the defence on record despite procedural irregularities

Holding

Where all parties are non-compliant with the procedural rules, the court was under a duty to consider the defence on record before dismissing the application to set aside the judgment.

Reasoning

Oraro & Co. Advocates filed a defence two days late without a notice of change of advocates, while the respondents' own post-judgment changes of advocates equally breached Order 9 rule 9. Given this mutual non-compliance and the duty to render substantive justice, the trial court should have evaluated the defence for triable issues before striking it out and dismissing the application to set aside the judgment.

p. 9
04

Exercise of discretion by the trial court

Holding

The trial court did not exercise its discretion properly in failing to consider the defence on record and in declining to set aside the ex parte judgment and allow the appellant to defend the claim.

Reasoning

On a first appeal, the appellate court re-evaluates the evidence and may interfere where discretion was wrongly exercised. Here the defence raised triable issues, including res judicata arising from HCCC No. 289 of 2009, and the claim required formal proof. Setting aside the judgment was necessary to permit the appellant to defend the claim and to accord with substantive justice.

p. 11

Legal principles established

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  • A default judgment entered against a defendant who has been served and has entered appearance is a regular default judgment, settable aside only in the court's discretion under Order 10 rule 11, not as of right.
  • A claim does not become liquidated merely because it is quantified; where ascertainment requires investigation beyond mere calculation it constitutes damages requiring formal proof.
  • Even where a judgment in default is regular, a court should consider a defence on record (or draft defence annexed) to determine whether it raises triable issues before declining to set aside the judgment.
  • The Court of Appeal on a first appeal must re-examine and evaluate the evidence before the trial court and reach its own conclusions.

Court orders

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  1. 1.Appeal allowed
  2. 2.Ruling of the High Court dated 11th May 2018 set aside
  3. 3.Appellant's application dated 31st July 2017 allowed
  4. 4.Each party to bear its own costs of the appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
majority
On appeal from
High Court of Kenya at Milimani
Nairobi HCCC No. 289 of 2015
Jurisdiction invoked
First appeal to the Court of Appeal under the Constitution and the Appellate Jurisdiction Act (first appeal from High Court ruling; duty to re-evaluate evidence as per Selle v Associated Motor Boat Co Ltd)

Quotable passages

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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 appellant's appeal, set aside the ruling of the High Court dated 11th May 2018, and allow the appellant's application dated 31st July 2017.
p. 11Final orders - disposal of the appeal
Given the comedy of errors engaged in by all the parties to this appeal with respect to representation, we direct that each party bears its own costs of the appeal.
p. 11Costs order
So, the short answer is that the ex parte judgment was a regular default judgment, one which could be set aside at the discretion of the court as provided under Order 10 rule 11 of the Civil Procedure Rules.
p. 10Regular vs irregular default judgment
A claim does not become a liquidated demand simply because it has been quantified.
p. 10Definition of a liquidated demand
in this case, in a situation where all parties were non-compliant, the court was under a duty to consider the defence on record, despite the circumstances under which it was filed.
p. 9Duty to consider defence on record
we find that in the circumstances of this case, the trial court was in error in finding that formal proof was not required.
p. 11Formal proof required for unliquidated damages

Issues in the judgment

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minor

The judgment is dated 3rd July 2026, which appears inconsistent with the record of submissions filed in 2024 and an appeal memorandum dated 2018; the date may contain a typographical error.

minor

The plaint value for goods carted away is inconsistently stated in the judgment (Kshs. 27,369,907 in one passage, Kshs. 27,360,907 in another, and Kshs. 27,309,907 in the quoted ruling).

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, "Velos Enterprises Limited v Paragon Electronics LTD & 3 others (Civil Appeal 274 of 2018) [2026] KECA 1273 (KLR)", Case Analysis (2026). Nairobi HCCC No. 289 of 2015 (appeal therefrom). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1273/eng@2026-07-03

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