Co-operative Bank of Kenya & Rentco East Africa Limited v Butaki Rollia Ndiema

2. In the Magistrate’s Court suit, the respondent vide the plaint dated 7th May 2019 sought for judgment against the appellants jointly and severally for general damages, special damages and costs of the suit plus interest. He claimed that he was involved in a road traffic accident while travelling in a motor vehicle registration No. GKB 978R owned by the appellants. The appellants despite having been served with summons to enter appearance failed to do so or file a defence. Thereafter, interlocutory judgment was entered and the matter proceeded to formal proof with a judgment being entered on 13th May 2020. This triggered the appellants to file the notice of motion dated 15 th June 2020 seeking leave to file a memorandum of appearance and a defence and for orders that the hearing of the matter starts de novo. The said application was opposed by the respondent through the replying affidavit sworn by his counsel, John Gikenye on 26th June 2020. The said application was dismissed vide the ruling dated 15th May 2020 thereby provoking an Appeal to the High Court. Page 2 of 15

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3. The Appeal was heard by learned Justice Jesse Njagi who in his judgment held that the appellants did not give a reasonable explanation as to why they did not enter appearance or file a defence. He further held that the draft statement of defence did not raise any triable issues. Consequently, he upheld the decision by the trial Court and dismissed the Appeal with costs to the respondent. 4. Aggrieved by this decision, the appellant lodged an Appeal before this Court premised on Ten (10) grounds which can be condensed as follows; a. That the learned judge erred in law and fact by finding that the appellants' statement of defence disclosed no triable issues and by determining the merits of the dispute without a full hearing, notwithstanding that ownership of the subject motor vehicle, liability, quantum, and the doctrine of subrogation under Cap. 405 of the Laws of Kenya were bona fide triable issues. b. That the learned judge erred in law and fact by failing to consider the appellants' defence, including the circumstances of the alleged self-involving accident, the respondents' capacity to maintain the suit, and the reasons for the appellants' delay in entering appearance and filing a defence arising from ongoing negotiations with their insurer. c. That the learned judge misdirected himself in law by failing to properly consider the appellants' submissions, the applicable Page 3 of 15

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law, and binding judicial precedents, thereby improperly exercising his discretion. Page 4 of 15

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d. That the learned judge erred in law and fact by finding that the appellants' failure to enter appearance was deliberate rather than inadvertent and by condemning the appellants unheard, contrary to Articles 50 and 159(2)(d) of the Constitution. 5. When the Appeal came up for hearing before us on 27th April 2026, learned counsel Mr. Mutegi holding brief for Mr. Marienga appeared for the appellants. There was no appearance for the respondent despite evidence that they had been served with the hearing notice on 9th April 2026. Mr. Mutegi made brief oral highlights at the plenary. It is also noted that the respondent did not file nor serve any submissions. 6. The appellants’ submissions are dated 19 th September 2024 and were filed through the firm of Marienga Advocates LLP. Learned counsel submitted that this dispute stems from a road accident which occurred on 20th January 2019 involving a government Nissan Patrol registration GKB 978R driven by Corporal Paul Kurao, carrying fourteen police officers, which suffered a tyre burst on Dambala-Fachana road in Marsabit County. He further submitted that the fifteen injured persons sued separately at Moyale Law Courts alleging vicarious Page 5 of 15

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liability Page 6 of 15

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against the appellants as purported owners. Thereafter, the lead file proceeded to formal proof and judgment was entered against the appellants. He argued that the delay in defending the suit arose because their Insurer was negotiating a settlement with the respondent's counsel in good faith, unbeknownst to which the respondent continued prosecuting the matter, resulting in entry of judgment. 7. Learned counsel invoked Section 3 of the Appellate Jurisdiction Act and Section 72(1) of the Civil Procedure Act and submitted that this being a second appeal, this Court's jurisdiction is confined to matters of law unless the lower courts considered irrelevant matters, failed to consider relevant matters, or their decision is perverse. He placed reliance on Mwita Vs. Woodventure (K) Limited & another [2022] KECA 628 (KLR), Stanley N. Muriithi & Another Vs. Bernard Munene Ithiga [2016] eKLR, Kenya Breweries Limited Vs. Godfrey Odoyo [2010] KECA 498, and Martin Vs. Glywed Distributors Ltd (t/a MBS Fastenings) 1983 ICR 511, for the proposition that appellate courts Page 7 of 15

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confined to law should not disturb Page 8 of 15

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findings of fact unless no reasonable tribunal could have reached them. He further invoked the principle in Mbogo Vs. Shah [1968] EA 93 governing interference with the exercise of judicial discretion, namely where the lower court misdirected itself, acted on irrelevant matters, or failed to consider relevant matters. 8. The appellants’ counsel cited the Traffic (Registration Plates) Rules, 2016 (L.N. 62/2016), which reserve "GK" plates for government vehicles and asserted that the High Court erred in failing to treat the ownership of the subject motor vehicle as a triable issue. He further asserted that the proceeding against a government entity requires suing through the Attorney General, who was not joined. He cited the decisions in Ali Lai Khalifa & 8 Others Vs. Pollman's Tours and Safaris & 2 Others, Mombasa HCCC No. 106 of 2002 , and Ormrod Vs. Crosville Motor Services Ltd [1954] 2 All ER 752 (per Lord Denning) and submitted that the principle that a registered owner escapes vicarious liability is where the vehicle is used for purposes in Page 9 of 15

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which the owner has no interest. Page 10 of 15

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9. He further cited the case of Patel v E.A. Cargo Handling Services Ltd [1974] E.A. 75 where the Court held that a triable issue is an issue which raises a prima facie defence and which should go to trial for adjudication. He submitted that it was a fundamental error for the High Court to dismiss the appellants Appeal without proper consideration. Therefore, their right to a fair trial under Article 50 of the Constitution was compromised by that oversight. He further submitted that the test for determining whether an employer is vicariously liable for the negligence of their employee was established in the case of Joseph Cosmas Khayigila Vs. Gigi & Co. Ltd & Another, Civil Appeal No. 119 of 1986. He added that the draft defence raises a significant triable issue regarding the denial of vicarious liability attributed to the appellant for the actions of the driver of the vehicle in question. 10. Learned counsel contended that since the fourteen injured police officers were on duty in a government vehicle, their claims properly fall under the Workers Page 11 of 15

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Injury Benefits Act (WIBA) rather than tort, invoking Section 10(5) of WIBA on conveyance of employees. He asserted that these claims Page 12 of 15

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should have proceeded before the Director of Occupational Safety and Health Administration and that allowing the suits to proceed in tort risks double compensation and abuse of court process. 11. Learned counsel submitted that the delay in entering appearance was not deliberate but attributable to ongoing negotiations. He cited the case of CMC Holdings Ltd Vs. James Mumo Nzioki [2004] KECA 143 (KLR) and submitted that even if the Court were to take the position that the explanation for the delay was weak, a proposition he respectfully disputes, the defence raised triable issues warranting the application’s success in the High Court. He argued that the High Court took an unduly narrow view by focusing solely on liability and the intended preliminary objection, while misapplying vicarious liability principles without appreciating contributory liability issues. He further argued that procedural technicalities were elevated over substantive justice regarding disputed thrown-away costs. He relied on Sangram Singh v Election Tribunal, Koteh, AIR 1955 SC 664, as cited Page 13 of 15

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in Gerita Nasipondi Page 14 of 15

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Bukunya & 2 others Vs. Attorney General [2019] eKLR, and invoked Articles 50 and 159 of the Constitution. 12. In conclusion, learned counsel reiterated the foregoing submissions ,concluding that the judgment of the High Court should be set aside to ensure that justice is achieved. To support this submission he relied on the case of Mureithi Charles & another v Jacob Atina Nyagesuka [2022] KEHC 1805 (KLR). 13. This being a second appeal, the Court’s mandate is limited to matters of law only, and the Court, cannot interfere with the concurrent finding of fact by the two courts below. This was the holding in the case of Kenya Breweries Ltd Vs. Godfrey Odoyo(supra).Further in the case of Stephen Muriungi and Another Vs. Republic [1982-88] 1 KAR 360 Chesoni Acting JA( as he then was) said at page 366 as follows; “We would agree with the view expressed in the English case of Martin vs Glywed Distributors Ltd (t/a MBS Fastenings)1983 1CR 511 that where a right of appeal is confined to questions of law only an appellate court has loyalty to accept the findings of fact of the lower court(s) and resist the temptation to treat findings of fact as holdings of law, and, it should not Page 15 of 15

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interfere with the decisions of the trial or first appellate court unless it is apparent that, on the Page 16 of 15

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evidence no reasonable tribunal could have reached that conclusion, which would be the same as holding the decision is bad in law”. 14. Upon carefully considering the grounds of appeal, the record of appeal, the appellants’ submissions and the authorities relied upon, we are of the view that the only issue for determination is whether the High Court erred in upholding the lower court’s ruling which dismissed the appellants’ application for setting aside the ex parte judgment entered in default of appearance and defence. 15. Setting aside a default judgment is an exercise of judicial discretion. Judicial discretion is unfettered. However, it must be exercised in accordance with the law. The guiding principles in an application for setting aside of an exparte judgment are now well settled. In CMC Holdings Limited v James Mumo Nzioki [2004] KECA 143 KLR this Court stated “We are fully aware that in an application before a court to set aside ex parte judgment, the Court exercises its discretion in allowing or rejecting the same. That discretion must be exercised upon reasons and must be exercised judiciously. On appeal from that decision, the Appellate Court would not interfere with the exercise of that discretion unless the exercise of the same Page 17 of 15

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discretion was wrong in principle or that the Court did act perversely on the facts. This is trite law and there are many decided cases in support Page 18 of 15

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of the proposition. One such authority is that of Magunga General Stores v Pepco Distributors [ 1987] 2 KAR 89 to which we were referred and in which this Court stated as follows:‘The Court on an appeal will not interfere with the exercise of a discretion on an application for summary judgment unless the exercise was wrong in principle or the judge acted perversely on the facts.” 16. Similarly, in Richard Ncharpi Leiyagu Vs. Independent Electoral Boundaries Commission & 2 others (Civil Appeal No 18 of 2023) [2013] KECA 282(KLR), this Court expressed itself as follows: “We agree with the noble principles which go further to establish that the Court’s discretion to set aside an ex-parte Judgment or order for that matter, is intended to avoid injustice or hardship resulting from an accident, inadvertence, or excusable mistake or error but not to assist a person who deliberately seeks to obstruct the course of justice.” 17. In view of the above, it is settled that the discretion to set aside an ex parte or interlocutory judgment exists to avoid injustice or hardship resulting from accident, inadvertence, excusable mistake or error, provided it is not intended to assist a litigant who has deliberately sought to obstruct or delay the course of justice. In addition, an appellate Court will interfere where that discretion has been exercised on wrong principles, Page 19 of 15

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relevant matters have Page 20 of 15

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been ignored, irrelevant considerations have been taken into account, or the decision is plainly wrong. 18. In the present suit, the trial Magistrate accepted that denying a litigant a hearing should be the last resort but nevertheless proceeded to conclude that the appellants had been indolent and the High Court upheld that decision. In our view, while the delay was undoubtedly prolonged and the explanation offered was less than satisfactory, the Courts below were still required to consider whether the proposed defence disclosed even a single bona fide triable issue. Once such an issue exists, the Court ordinarily leans in favour of allowing the matter to proceed to trial upon appropriate terms. 19. Upon examining the draft defence, we are unable to agree with the concurrent findings that it disclosed no triable issue whatsoever. First, ownership of motor vehicle registration number GKB 978R was expressly denied. Ownership is a fundamental ingredient of liability in negligence claims founded on vicarious liability and remains a matter requiring proof. Secondly, negligence was denied. The appellants pleaded that if Page 21 of 15

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any accident Page 22 of 15

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occurred, it was wholly occasioned by the respondent's negligence. Although some particulars of contributory negligence may ultimately prove unsuccessful, their strength or weakness is not a matter for determination at an interlocutory stage. Thirdly, the appellants denied the respondent's injuries and put him to strict proof. It is our view that questions relating to causation and quantum ordinarily require evidence. Fourthly, the defence disputed the applicability of the doctrines of res ipsa loquitur and vicarious liability and pleaded volenti non fit injuria. Whether those defences ultimately succeed is a matter for the trial Court after evidence has been adduced. 20. The trial Court went beyond determining whether triable issues plausibility of existed the and instead defence by evaluated describing the some allegations as bewildering and interesting. In doing so, the trial Court determination of effectively factual embarked disputes without upon a hearing evidence from both parties. Likewise, the High Court fell into error by affirming that approach instead of asking Page 23 of 15

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the correct question that is ; whether the draft defence disclosed arguable issues fit for trial. The law Page 24 of 15

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does not require that a proposed defence be one that is guaranteed to succeed. It is sufficient if it raises even one bona fide issue deserving judicial investigation. 21. The constitutional principles embodied in Articles 50 and 159 of the Constitution require Courts, where reasonably possible, to determine disputes on their merits. Finality of litigation remains an important objective, but it should not override the fundamental right to a fair hearing where prejudice to the opposing party can adequately be remedied through costs. We observe that in their submissions before the trial Court ,the appellants proposed to compensate the respondent and the plaintiffs in the other related suits the sum of Kshs 15,000/-as thrown away costs for each case. We find that to be reasonable. 22. Accordingly, we find merit in the Appeal. Consequently, the judgment of the High Court dated 8 th July 2021, , the ruling of the trial Magistrate's Court dated 10 th July 2020 and the exparte judgment entered on 13 th May 2020 are hereby set aside. The appellants are granted leave to file their statement of defence before the Magistrate’s Page 25 of 15

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court Page 26 of 15

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within thirty (30) days of this judgment, failing which the exparte judgment shall stand revived without further reference to this Court. 23. The upshot is that the Appeal is allowed with half costs to the respondent for each of the two appeals. 24. Orders accordingly. Dated and delivered at Meru this 25th day of September, 2026 S. GATEMBU. KAIRU, FCIArb, C.Arb ….………………..…………. JUDGE OF APPEAL H.I. ONG’UDI ……………….…………… JUDGE OF APPEAL SILA MUNYAO …………………………. JUDGE OF APPEAL I certify that this is the true copy of the original signed DEPUTY REGISTRAR Page 27 of 15

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