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Court of AppealPartially AllowedCivil Appeal No. 38 of 1998· [1998] KECA 40 (KLR)

Tree Shade Motors Limited v D.T. Dobie And Company (K) Limited & Another [1998] KECA 40 (KLR)

Court of Appeal
10 July 1998
RKR. O. KwachPhilip Kiptoo TunoiP. K. TunoiSBS. E. O. Bosire
1,301 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that even a properly served defendant can have a default judgment set aside if they show a reasonable defence.

What this practically means

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Executive summary

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The Court of Appeal (Kwach, Tunoi and Bosire, JJ.A) allowed an appeal by Tree Shade Motors Limited against a ruling of Ole Keiwua J dismissing its application to set aside an ex parte interlocutory judgment entered against it for Shs 1,412,202.50 in a suit by Joseph Rading Wasambo against D.T. Dobie and Company Limited and Tree Shade Motors over the sale of the plaintiff's motor vehicle. The appellant had been served by registered post under Order V r 2(b) but did not enter appearance or file a defence, attributing the failure to internal changes in shareholders and directors occurring between 1992 and 1993. The High Court held the judgment regular because service was proper, and dismissed the setting-aside application. The Court of Appeal agreed that service was proper, since the changes relied on predated the suit by two years. However, it held the judge fell into error by failing to examine the draft defence annexed to the application. Relying on its earlier decision in Kingsway Tyres and Automart Ltd v Rafiki Enterprises Ltd, the Court reaffirmed that where a draft defence is tendered, the court is obliged to consider whether it raises a reasonable defence, and if so the defendant should be given leave to defend; and that even a regular ex parte judgment may be set aside where a reasonable defence on the merits is shown. The draft defence, asserting bona fide purchase for value without notice, was such a defence. The appeal was allowed, the High Court ruling and the ex parte judgment were set aside, leave to defend was granted within 14 days, and the appellant was ordered to pay the plaintiff's thrown away costs and appeal costs assessed at Shs 20,000, with the first defendant denied costs.

Key legal issues

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01

Duty of the court to consider a tendered draft defence on an application to set aside default judgment

Holding

The learned judge erred by not examining the draft defence; where one is tendered, the court must consider whether it raises a reasonable defence and, if so, grant leave to defend.

Reasoning

The Court of Appeal, applying its own decision in Kingsway Tyres and Automart Ltd v Rafiki Enterprises Ltd, held that the judge below stopped at the question of service and never looked at the draft defence. The draft defence raised a bona fide purchaser-for-value-without-notice claim, which, if it prevails, would defeat the plaintiff's claim against the appellant and redirect him to the first defendant. That was a defence the appellant should be allowed to raise despite its lack of candour on service.

p. 2
02

Effect of regularity of service on setting aside an ex parte judgment

Holding

Service was properly effected and the judgment was regular, but regularity does not preclude setting aside where a reasonable defence on the merits is shown.

Reasoning

The internal management changes relied on occurred between 1992 and 1993, two years before suit, so they could not have affected receipt of process. The judge was right to hold service proper. However, following Kingsway Tyres, a regular ex parte judgment may still be vacated where the defendant demonstrates a reasonable defence on the merits; the plaintiff's inconvenience is adequately redressed by costs, as he suffers no prejudice.

p. 2

Legal principles established

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  • Where a draft defence is tendered with an application to set aside default judgment, the court is obliged to consider whether it raises a reasonable defence, and if so the defendant should be given leave to defend.
  • Even where service is regular and the ex parte judgment is a regular judgment, a court may set it aside if the defendant shows a reasonable defence on the merits.

Court orders

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  1. 1.Appeal allowed
  2. 2.Ruling and order of Ole Keiwua J dated 30th June 1995 set aside
  3. 3.Substituted order allowing the second defendant's application dated 27th March 1995
  4. 4.Ex parte interlocutory judgment entered on 28th December 1994 against the second defendant set aside
  5. 5.Second defendant granted leave to enter and defend and to file its defence within 14 days
  6. 6.Second defendant to bear the plaintiff's thrown away costs and costs of the appeal assessed at Shs 20,000, payable within 14 days, in default execution to issue
  7. 7.First defendant not entitled to costs

Authorities

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Legislation

  • Civil Procedure RulesOrder V r 2(b)
  • Civil Procedure RulesOrder 1XA rr 10 and 11

Cases cited (1)

  • Kingsway Tyres and Automart Ltd v Rafiki Enterprises Ltd
    Civil Appeal No. 220 of 1995 (Unreported)
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 3764 of 1994
Jurisdiction invoked
First appeal to the Court of Appeal against a ruling and order of the High Court in a civil suit

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Tree Shade Motors Limited v D.T. Dobie And Company (K) Limited & Another [1998] KECA 40 (KLR)", Case Analysis (1998). Civil Appeal No. 38 of 1998. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1998/40/eng@1998-07-10

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