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Court of AppealPartially AllowedCivil Appeal No. 33 of 2007· [2015] KECA 483 (KLR)

Kanwal Sarjit Singh Dhiman v Keshavji Jivraj Shah [2015] KECA 483 (KLR)

Court of Appeal
31 July 2015
GKG. B. M. KariukiPhilomena Mbete MwiluP. M. MwiluFSF. Sichale
3,101 words in judgment
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The bottom line

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Kenya's Court of Appeal set aside a 1999 ex parte judgment, ruling that courts should prioritise a fair hearing over strict procedure, even after long delays.

What this practically means

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Executive summary

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This was a first appeal to the Court of Appeal at Nairobi against a ruling of Kasango, J delivered on 18th December 2006 dismissing the appellant's chamber summons application seeking review and setting aside of an ex parte judgment entered after formal proof in HCCC No. 205 of 1999, in which the respondent sued to recover a KShs.7,000,000 loan advanced under a 1996 agreement with interest at 36% per annum. The ex parte judgment was for KShs.17,020,365/40 plus interest; the respondent thereafter executed against the appellant's property, purchased it at auction for KShs.17,000,000 and obtained a vesting order and an eviction order. The appellant, who did not deny the borrowing, applied in November 2006 to set aside the judgment and for leave to defend, pleading duress, illegality of the money-lending arrangement, unconscionable interest and an irregular sale. The Court of Appeal held that the review limb of the application failed because no error apparent on the face of the record and no new and important matter were demonstrated. However, applying the settled principles on setting aside ex parte judgments - a prima facie triable defence and a satisfactory explanation for delay, with the court's wide discretion directed at doing justice - the court found that the learned judge had failed to exercise her discretion judiciously, noting the parties' protracted negotiations and the appellant's part-payment of KShs.3,000,000. The court allowed the appeal, set aside the ex parte judgment, deemed the draft defence filed on payment of fees within seven days, and ordered the appellant to bear the costs of the appeal.

Key legal issues

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01

Grounds for review under Order XLIV (Order 45) Rule 1

Holding

The application for review was not well-founded as no error apparent on the face of the record and no new and important matter was demonstrated

Reasoning

Review of a judgment is governed by the Civil Procedure Rules, which permit review only on discovery of new and important matter, error apparent on the face of the record, or any other sufficient reason, applied for without unreasonable delay. The appellant identified none of these grounds for the judgment entered on 16th June 1999, so the review limb of his application could not succeed.

p. 5
02

Setting aside an ex parte judgment

Holding

An applicant must demonstrate a prima facie (triable issue) defence and explain the delay; the court retains a wide discretion aimed at doing justice between the parties

Reasoning

Relying on the principles in Mbogo v Shah, Peter v EA Cargo Handling Services Ltd and Ashwinchand Hirjie Shah v Lucy Wairimu Mwaura, the court reiterated that setting aside an ex parte judgment requires a defence on the merits raising a triable issue and a satisfactory explanation for the delay, but the discretion is not fettered by rigid conditions; the court balances the divergent interests of the parties.

p. 5
03

Judicial exercise of discretion by the trial judge

Holding

The learned judge failed to exercise her discretion judiciously, and the Court of Appeal interfered so as not to cause injustice

Reasoning

Although the application to set aside was filed almost seven years after the ex parte judgment, the history of the case showed active engagement of the court and out-of-court settlement discussions, including a payment of Kshs.3,000,000. The appellant did not deny the borrowing; his defence raised the unconscionability of the interest rate. In these circumstances justice required giving him a chance to ventilate his case.

p. 6

Legal principles established

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  • An applicant to set aside an ex parte judgment must show a prima facie defence to the action and satisfy the court as to the cause of the delay in entering appearance and filing a defence
  • The court's discretion to set aside a judgment is wide and its main concern is to do justice to the parties; a defence on the merits means a triable issue, not a defence that must succeed
  • An appellate court may interfere where a trial judge failed to exercise her discretion judiciously so as not to cause injustice

Court orders

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  1. 1.The appeal is allowed
  2. 2.The ex parte judgment entered on 16th September 1999 is set aside
  3. 3.The draft defence is deemed as duly filed upon payment of the requisite fees within 7 days from the date of the judgment
  4. 4.The costs of the appeal shall be borne by the appellant
On appeal from
High Court of Kenya at Nairobi (Milimani Commercial Courts)
H.C.C.C. No. 205 of 1999
Jurisdiction invoked
First appellate jurisdiction over appeals from the High Court under the Constitution and the Civil Procedure Act (appeal against a ruling of the High Court)

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, "Kanwal Sarjit Singh Dhiman v Keshavji Jivraj Shah [2015] KECA 483 (KLR)", Case Analysis (2015). Civil Appeal No. 33 of 2007. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/483/eng@2015-07-31

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