Ngigi v Kimaru

incorporated in the United States of America (USA) in which the Applicant served as director at the material time. That, the said company was subjected to bankruptcy proceedings in the USA. 3. The Plaintiff, notwithstanding the ongoing bankruptcy proceedings, instituted a suit against the Applicant in the Superior Court of Worcester County Massachusetts and obtained ex parte judgment in the sum of USD 926,599.20. 4. The Applicant stated that the proceedings were conducted in his absence and he was not granted a chance to defend himself. He stated that the Massachusetts Court lacked jurisdiction over the matter as the debt was owed by the company and not the Applicant in his personal capacity and that the said proceedings and judgment were rendered during the subsistence of the bankruptcy case. 5. It is stated, further, that the Respondent instituted the current proceedings before this Court and an ex parte judgment in the sum of USD 926,599.20 together with costs and interest was entered against the Applicant. The Applicant has stated that the attempt by the Respondent to enforce the debt against the Applicant personally in Kenya is a calculated effort to circumvent the US Bankruptcy proceedings and unjustly recover a corporate debt from a non-liable individual. Replying Afidavit 6. The Respondent has opposed the application through his Replying Affidavit sworn on 30th May 2025. He has deposed that the Applicant solicited for an urgent personal loan of USD 800,000 to meet financial obligations of Compassionate Homecare Inc.; that the money was wired to him in two instalments; that he failed to repay the money and left the USA to Kenya; that he filed a case to recover the money and that judgment was entered for Kshs 926,599. 7. He deposed that he instituted proceedings in Kenya to enforce the judgment and that the judgment sought to be enforced is a valid and regular judgment. The Respondent terms the application as frivolous that ought to be dismissed with costs. Submissions 8. This application was canvassed by way of written submissions. The Applicant’s submissions are dated 12th June 2025. He identified two issues for determination: i. Whether this Honourable Court had jurisdiction to recognize and enforce the foreign judgment delivered by the Court of Worcester County, Massachusetts, USA. ii. Whether this Honourable Court should set aside the interlocutory judgment entered on 13th November 2024 and the ex-parte judgment entered on 16th December 2024. 9. On the first issue, it was submitted that this court did not have jurisdiction to hear and determine this suit and consequently deliver judgment. The Applicant relied on section 3 (1) of the Foreign Judgments (Reciprocal Enforcement) Act and The Foreign Judgments (Reciprocal Enforcement) (Extension of Act) Order, 1984 to support his submissions that this court did not have jurisdiction. He also relied on East African Development Bank v Dari Limited & 5 others [2020] eKLR both before the High Court and the Court of Appeal in Dari Limited & 5 others v East African Development Bank (Civil Appeal 70 of 2020) [2023] KECA 454 (KLR) (20 April 2023) (Judgment) at paragraphs 43 and 44 to the effect that not all judgments from foreign courts are enforceable in Kenya. 10. On the second issue, it was submitted that owing to the findings of the High Court and the Court of Appeal in the cited cases in paragraph 9 above, this Court ought to set aside the interlocutory judgment entered on 13th November 2024 and the ex-parte judgment entered on 16th December 2024 for want https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16416/eng@2025-10-15 2

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of jurisdiction. The Applicant relied on section 10 of the Foreign Judgments (Reciprocal Enforcement) Act to support his submissions. 11. The Applicant has also submitted on the issue of jurisdiction of the original court and his nonappearance and absence of defence in the USA Court. 12. The Respondent filed submissions dated 17th June 2025. He has raised the following issues for determination: i. Whether this court is clothed with jurisdiction to entertain the instant suit. ii. Whether the applicant has satisfied the threshold for setting aside the ex-parte judgment. iii. Whether the applicant’s prayer for release of motor vehicle registration number KCG 135Z has been overtaken by events. iv. Whether the court can imposse conditional sanctions pending hearing and determination of the suit. v. Whether the applicant is entitled to costs. 13. On the first issue, it was submitted that this court has jurisdiction to enforce the judgment. Reliance was placed on Jayesh Hasmukh Shah v Navin Haria & another [2016] eKLR to support that point. 14. On the second issue, it was submitted that the setting aside of an ex parte judgment is discretionary as provided under Order 10 Rule 11 of the Civil Procedure Rules. The Respondent relied on Bouchard International Services) Ltd v M'mwereria [1987] KLR 193 and submitted that the Applicant was duly served with the summons and pleadings and therefore the judgment rendered by the court on 16th December 2024 is a regular judgment; that the Applicant was afforded all the opportunity to defend himself but failed to do so; that the Applicant has, in the draft judgment, challenged the jurisdiction of this court and that his draft defence amounts to mere denials. It was submitted that the Applicant has failed to demonstrate that US bankruptcy proceedings are final and conclusive. 15. On the third issue it was submitted that the motor vehicle in issue has been sold and therefore the prayer for stay of execution is spent. 16. On the fourth issue, it was submitted that this court retains inherent discretionary power to impose terms where justice requires and that any grant of leave to defend must be conditional on depositing the entire decretal sum into court as an essential safeguard to prevent abuse of the process and ensure enforceable judgment. 17. On the issue of costs, the Respondent submitted that he is entitled to costs. He relied on section 27 of the Civil Procedure Act and Supermarine Handling Services Ltd v Kenya Revenue Authority [2010] eKLR where the court held that: “ Costs of any action or other matter or issue shall follow the event unless the court of Judge shall for good reason otherwise order. It is well established that when the decision of such a matter as the right of a successful litigant to recover his costs is left to the discretion of the Judge who tried his case, that discretion is a judicial discretion, and if it be so its exercise must be based on facts.” https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16416/eng@2025-10-15 3

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Analysis and Determination 18. I have considered the Application and the grounds in support of it. I have considered the Replying Affidavit and the grounds advanced in opposition to the Application. I have isolated the following as the central issues for determination: a. Whether this Honourable Court is clothed with the jurisdiction to recognize and enforce the foreign judgment delivered by the Superior Court of Worcester County, Massachusetts, United States of America in Civil Case No. 1985CV01797? b. Whether the Applicant has met the threshold for setting aside the ex parte judgment? 19. On the first issue, each party has argued their case on the issues raised with the Applicant arguing that the initial judgment sought to be recognized and enforced was made by a court in Worcester, Massachusetts, United States of America, which is neither a Commonwealth country or considered as a reciprocating country under the laws of Kenya. 20. The Respondent has argued that the Applicant’s jurisdictional objection is fundamentally flawed as it erroneously presupposes that the Foreign Judgments (Reciprocal Enforcement) Act (the Act) provides the exclusive mechanism for enforcing foreign judgments in Kenya. He argued that where there are no reciprocal provisions of law, a foreign judgment is enforced as a claim in Common Law as was held in Jayesh Hasmukh Shah v Navin Haria & another [2016] eKLR. 21. Section 2 of the Act defines "designated court" to mean: 22. (a) a superior court of a reciprocating country which is a Commonwealth country; (b) a superior court of any other reciprocating country which is specified in an order made under section 13; (c) a subordinate court of a reciprocating country which is specified in an order made under section 13. Under Paragraph 2 of The Foreign Judgments (Reciprocal Enforcement) (Extension of Act) Order, 1984 lists the countries declared to be reciprocating countries for purposes of the Act as Australia, Malawi, Seychelles, Tanzania, Uganda, Zambia, United Kingdom and the Republic of Rwanda. The position pertaining in Kenya is that not all judgments from foreign courts are enforceable in Kenya. As stated in East African Development Bank v Dari Limited & 5 others [2020] eKLR: “ Under Section 13 of the Act, the country giving the judgment must be a reciprocating country as declared by the line minister by an order, to be a reciprocating country for the purposes of this Act.” 23. The Court of Appeal in the same Dari Case reaffirmed this position. I need not belabor the point that United States of America is not one of the countries listed under Paragraph 2 of The Foreign Judgments (Reciprocal Enforcement) (Extension of Act) Order, 1984. 24. The Respondent has relied on Jayesh case to argue that where there are no reciprocal provisions of law, a foreign judgment is enforced as a claim in common law. The Court of Appeal in the Jayesh case concluded the judgment on appeal by stating as follows: “ For avoidance of doubt, we state that the High Court of Kenya pursuant to the provisions of Section 3 of the Judicature Act and its original and unlimited civil jurisdiction provided in https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16416/eng@2025-10-15 4

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Article 165 (3) of the Constitution has jurisdiction to hear and determine any issue relating to enforceability of foreign judgments from non-designated countries.” 25. After due consideration of this issue and the arguments of both parties, it is my view that the Court exercised its jurisdiction within the law as stated in the Court of Appeal decision in Jayesh case. 26. On the second issue, I have considered the rival submissions of the parties. The Applicant, riding on the arguments that this court lacked jurisdiction to entertain the matter, submitted that this court ought to set aside the interlocutory judgment entered on 13th November 2024 and the ex parte judgment entered on 16th December 2024. 27. The Applicant argued that the original principal sum, USD 800,000 was wired to the accounts of Compassionate Homecare Inc., a separate legal entity from the Applicant; that the said company was subjected to bankruptcy proceedings in the USA where the said company was mandated to disclose all its creditors to the Court and the Bankruptcy Trustee and that the Company submitted the Respondent as one of its creditors but the Respondent failed to lodge his claim or object to the said bankruptcy proceedings. 28. The Applicant has submitted that despite the bankruptcy proceedings, the Respondent went ahead and instituted proceedings against the Applicant to recover the money advanced to the company whose judgment the Respondent is seeking to have recognized and enforced. He claims, further, that the Massachusetts court lacked jurisdiction over the matter as the debt was owed by the company and not the Applicant in his personal capacity and that the proceedings and judgment were rendered during the subsistence of the bankruptcy proceedings. 29. The Applicant relied on Section 9 of the Civil Procedure Act to argue that the foreign judgment is not conclusive because it was not pronounced by a court of competent jurisdiction and that he has commenced proceedings to have the said original proceedings set aside in the USA. 30. The Applicant has argued that the dispute in the USA was not heard on merit as required under Section 9(b) of the Civil Procedure Act because he was not given a chance to defend himself in the original suit. 31. The Respondent has argued that the power of the Court to set aside ex parte judgment is discretionary; that the Applicant was served with the summons and pleadings and therefore the judgment entered on 16th December 2024 is a regular judgment; that this fact is not contested and therefore the only issue is whether the Applicant has advanced reasonable arguments warranting this court to set aside the ex parte judgment. 32. The Respondent has argued that the draft defence reveals a preliminary objection challenging the Honourable Court’s jurisdiction and secondly, the rest of the draft judgment consist of mere denials regarding the existence of foreign bankruptcy proceedings which the Respondent was allegedly obligated to follow. It is argued that the Applicant has failed to demonstrate that the bankruptcy proceedings in the USA are final and conclusive and how, such proceedings, even if proven to exist and be conclusive, could be given effect to by this Court and therefore no trial issues have been advanced to warrant the setting aside of the ex parte judgment. 33. The Respondent further submitted that this court retains inherent discretion to impose terms where justice so requires and therefore should this court be inclined to grant leave to the Applicant to defend the suit despite lack of statutory provision expressly mandating preconditions for setting aside ex parte judgment, this ought to be on condition that he deposits the entire decretal sum into court as an essential safeguard to prevent abuse of process and ensure enforceable judgment. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16416/eng@2025-10-15 5

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34. The applicable provisions for setting aside ex parte judgment is Order 10 Rule 11 of the Civil Procedure Rules. It provides that: Where judgment has been entered under this Order the court may set aside or vary such judgment and any consequential decree or order upon such terms as are just. 35. The Applicant majorly relied on the grounds that the funds were advanced to a company which is a separate legal entity and when the original suit was filed in the USA, there was in existence bankruptcy proceedings against the company which automatically operated as stay of execution and that the Respondent failed to disclose the existence of bankruptcy proceedings. 36. The Applicant has not demonstrated why he failed to enter appearance or attend court for hearing of this case before this Court. He has remained silent on that issue, choosing instead to hold the position that his defence raises triable issues. The main point raised by the Respondent is that the judgment entered by this Court is a regular judgment. 37. To set aside a judgment entered under Order 10 is discretionary. A regular judgment may also be set aside under Order 10 after the Court has reviewed the matter before it to ensure that no party suffers injustice. As stated in Bouchard International (Services) Ltd v M’mwereria [1987] KLR 193, “To exercise this discretion is a statutory duty and the exercise must be judicial. The court in doing so is duty bound to review the whole situation and see that justice is done. The discretion is intended to be so exercised to avoid injustice or hardship resulting from accident, inadvertence or excusable mistake or error but is not designed to assist a person who has deliberately sought whether by evasion or otherwise to obstruct or delay the course of justice.” 38. I have considered the statements by the Applicant that his defence raises triable issues. I have also considered the interest of the Respondent who has the benefit of a judgment. Guided by the decision in Kennedy Makasembo v Kenya Union of Post Primary Education Teachers [2017] eKLR that “The Constitution requires that every person is given an opportunity to defend itself but not does require the Court to bend backwards to accommodate a party who after being given an opportunity to defend itself, deliberately fails to do so, as is the case herein….” and the Court of Appeal decision in Philip Kiptoo Chemwolo and Mumias Sugar Company Ltd v Augustine Kubede (1982-1988) KAR where that Court held that “The court has unlimited discretion to set aside or vary a judgment entered in default of appearance upon such terms as are just in the light of all facts and circumstances both prior and subsequent and of respective merits of the parties….”, I am inclined to allow this application on the terms set out in the orders granted. 39. Consequently, the Notice of Motion dated 20th May 2025 is allowed on the following terms: a. The interlocutory judgment entered against the Defendant/Applicant on 13th November 2024 is hereby set aside. b. The ex-parte judgment delivered on the 16th December 2024 and all consequential orders therein are hereby set aside. c. The Defendant/Applicant is granted leave to defend the suit and that the Defence should be filed within 21 days from today’s date. d. That the Defendant/Applicant shall deposit in the Court half of the decretal sum being USD 463,299.60 or equivalent in Kenya Shillings at the current exchange rate. This shall be done within 60 days from todays date. e. There is no order to costs granted. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16416/eng@2025-10-15 6

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40. Orders shall issue accordingly. DATED, SIGNED AND DELIVERED THIS 15TH OCTOBER 2025. S. N. MUTUKU JUDGE https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16416/eng@2025-10-15 7

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