Velos Enterprises Limited v Paragon Electronics LTD & 3 others (Civil Appeal 274 of 2018) [2026] KECA 1273 (KLR)
The bottom line
#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
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the trial court properly exercised its discretion in declining to set aside the ex parte judgment entered on 26th October 2015
- 2.Whether the firm of Oraro & Company Advocates was properly on record for the appellant
- 3.Whether the appellant's statement of defence was properly on record and ought to have been considered by the court
- 4.Whether the ex parte judgment entered on 26th October 2015 was regular in the circumstances of the case
- 5.Whether the respondents' claim was for liquidated damages not requiring formal proof
Key legal issues
#Regularity of the ex parte judgment
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.
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.
Liquidated claim and formal proof
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.
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.
Consideration of the defence on record despite procedural irregularities
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.
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.
Exercise of discretion by the trial court
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.
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.
Legal principles established
#- 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
#- 1.Appeal allowed
- 2.Ruling of the High Court dated 11th May 2018 set aside
- 3.Appellant's application dated 31st July 2017 allowed
- 4.Each party to bear its own costs of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- 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
#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.
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.
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.
A claim does not become a liquidated demand simply because it has been quantified.
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.
we find that in the circumstances of this case, the trial court was in error in finding that formal proof was not required.
Issues in the judgment
#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.
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
#Practical implications
#Frequently asked questions
#Cite this brief
#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.