Kwanza Estates Limited v Dubai Bank Kenya Limited (In Liquidation) & 2 others [2019] KECA 387 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that a wrongly obtained default judgment is a nullity that courts can set aside on their own motion.
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 Judge erred in setting aside the interlocutory judgment entered in favour of the appellant in default of appearance and the consequential formal proof proceedings
- 2.Whether the 2nd and 3rd respondents are proper parties to the suit before the High Court
- 3.Whether advocates representing the respondents are properly on record
- 4.Whether the 2nd respondent should have been struck out from the suit (cross appeal)
Key legal issues
#Setting aside of the irregular default interlocutory judgment
The Deputy Registrar had no jurisdiction to enter interlocutory judgment under Order 10 Rule 6 for a claim for permanent injunctions, declarations and general damages; the judgment was premature, irregular and a nullity which the court could set aside as a matter of right
Order 10 Rule 6 applies only to claims for pecuniary damages or detention of goods. The appellant's claim was for permanent injunctions, declarations and general damages, so no regular judgment could be entered. Following James Kanyiita Nderitu, an irregular judgment may be set aside even suo motu, without examining triable issues or delay. The Judge's exercise of discretion therefore fell within the principles in Mbogo v Shah.
Joinder of the 2nd respondent (Kenya Deposit Insurance Corporation)
The court below was entitled to decline to strike out the 2nd respondent because an earlier order made pursuant to a recorded consent allowed its joinder; whether that consent circumvents the Kenya Deposit Insurance Act is a matter for the trial court
The only basis of the 2nd respondent's involvement is its appointment as liquidator, and the appellant ought to have sued Dubai Bank in liquidation. However, an order of 19th February 2016 pursuant to a consent of 28th October 2015 allowed the joinder, and the court could not sit on appeal over its own decision. The statutory circumvention argument remains for the trial court.
Joinder of the 3rd respondent
The 3rd respondent was properly joined as a necessary party because the plaint contains claims against him which entitle him to defend himself
Paragraphs 9 et seq of the plaint contain claims against the 3rd respondent personally. Under Order 1 Rule 10(2) of the Civil Procedure Rules, a person whose presence is necessary to enable the court effectually and completely adjudicate upon all questions in the suit may be added. Natural justice and Article 50 support his right to be heard.
Legal principles established
#- An interlocutory default judgment entered irregularly may be set aside by the court suo motu, without consideration of triable issues or delay in applying to set it aside
- A request for interlocutory judgment under Order 10 Rule 6 lies only for pecuniary damages or detention of goods, not for permanent injunctions, declarations or general damages; such a judgment is a nullity
- An appellate court will not interfere with the exercise of discretion by a judge unless the decision is clearly wrong
- A court cannot sit on appeal over its own prior order; a consent-based joinder order stands unless canvassed before the trial court
Court orders
#- 1.Appeal dismissed with costs to the respondents
- 2.Cross appeal dismissed with no orders as to costs
- 3.Orders accordingly
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Mombasa
- HCCC No. 44 of 2013
- Jurisdiction invoked
- First appellate jurisdiction under the Court of Appeal Act over an appeal from the High Court (ruling of 18th January 2019 in HCCC No. 44 of 2013)
Relief refused
#Appellant's challenge to setting aside of the interlocutory judgment and formal proof proceedings
The default judgment was premature and irregular and the court could set it aside as a matter of right even suo motu
2nd respondent's cross appeal seeking removal from the suit
There was a prior consent and court order allowing joinder which the court could not revisit by sitting on appeal over its own decision
Costs
Appeal dismissed with costs to the respondents; cross appeal dismissed with no orders as to costs.
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.
The upshot of the foregoing is that the appeal and the cross appeal fail. Accordingly, we hereby dismiss the appeal with costs to the respondents. The cross appeal is hereby dismissed with no orders as to costs.
The request for the default judgement was premature, irregular and overtly untenable. Where such facts present themselves to court, the court has no discretion to exercise. It can only answer to the principle of law that nothing put on a nullity can stand.
once it comes to the notice of the court that a judgment is irregular, the court does not have to be moved to set it aside. It can do so suo motto without venturing into considerations whether the intended defence raises triable issues or whether there was delay in applying to set aside the irregular judgment.
For us to interfere with the exercise of discretion by the Judge, it must be shown that his decision is clearly wrong because he misdirected himself or because the he acted on matters on which he should not have acted
there was a court order issued by the same court on 19 th February 2016, albeit pursuant to an earlier consent recorded on 28th October 2015, allowing the joinder of the 2nd respondent, and it was therefore not open to the same court to sit on appeal over its own decision.
Issues in the judgment
#Judgment refers inconsistently to the date of the ex parte judgment, in one passage 21st May 2013 and in another 20th May 2015
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kwanza Estates Limited v Dubai Bank Kenya Limited (In Liquidation) & 2 others [2019] KECA 387 (KLR)", Case Analysis (2019). Civil Appeal No. 26 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/387/eng@2019-08-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.