Hastings Irrigation (K) Ltd v Standard Chartered Bank (K) Ltd & 2 others

Court of Appeal, at Kisumu December 2, 1987

Hancox, Nyarangi JJA & Masime Ag JA

Civil Application No NAI 172 of 1987

(Appeal from a ruling of the High Court at Nairobi, Mbogholi-Msagha J)

Company law – debenture – appointment of receiver and manager under a debenture – circumstances in which a court will interfere with such appointment – party seeking to restrain receivers and managers appointed validly under debenture–– reluctance of court to interfere with such receivership where no compelling reasons are shown – Court of Appeal Rules rule 5(2)(b).

Appeal – inherent power of Court of Appeal – when such power may be invoked – where there are is no other specific remedy - Court of Appeal Rules rule 1.

The appellant company executed a charge by debenture of all its undertaking and property in favour of the first respondent bank in consideration of certain loan facilities. The debenture empowered the bank to appoint a receiver and manager of the charged property if the monies became due and payable by, among other means, demand or by breach of any of the covenants in the debenture. After the appellant had defaulted in servicing the loan facility, the first respondent appointed the second and third respondents as receivers and managers. The appellant sued the respondents in the High Court and sought a temporary injunction against them. The Court declined to grant the injunction and the appellant appealed the decision to the Court of Appeal which he also asked to grant a similar injunction.

Held:

1. It had not been shown by the appellant that the appointment of the second and third respondents as receivers and managers was an improper exercise of the power as contained in the debenture.

2. It is not appropriate for the court to interfere with a validly appointed receivership unless it is shown that the conduct of the receivers and managers was seriously oppressive or not in accordance with the recognised principles of law and of commercial practice or that there were clear and compelling reasons for doing so .

3. The inherent jurisdiction provisions of rule 1 of the Court of Appeal Rules can only be prayed in aid, in the absence of other specific remedies.

Application refused.

Cases

1. Mohamed v Madhani (1953) 20 EACA 8

2. Giella v Cassman Brown & Co Ltd [1973] EA 358

3. Simlani v Magotswe Civil Appeal No 1 of 1987 (unreported)

Statutes

1. Court of Appeal Rules (cap 9 Sub Leg) rules 1; 5(2)(b)

2. Civil Procedure Rules (cap 21 Sub Leg) order L rule 16

3. Transfer of Property Act, 1882 section 69(1)

Advocates

Mr N Thiongo for the Appellant

Shadrack Arap Baiywo v Bodi Bach

Court of Appeal, at Kisumu November 24, 1987

Nyarangi, Platt & Apaloo JJA

Civil Appeal No 122 of 1986

(Appeal from the High Court at Kisumu, Butler-Sloss J)

Civil Practice and Procedure – service of summons – service on adult member of family – when defendant cannot be found – duty to make reasonable inquiries before effecting such service – whether service made without reasonable inquiries as to defendant’s whereabouts is cured if defendant later receives summons in time – Civil Procedure Rules Order V rule 12.

Civil Practice and Procedure – judgment – default judgment – setting aside – principles the courts will consider in an application to set aside – applicant stating merely that he has a good defence without disclosing nature of the defence – whether applicant entitled to an order setting aside judgment.

The respondent filed a suit against the appellant in which an interlocutory judgment was given in default of the appellant entering an appearance or filing a defence.

The appellant’s application challenging the interlocutory judgment on the service of summons was dismissed, with the High Court holding that service of summons had been proper and the judgment had been duly entered.

The appellant appealed against the decision. His advocate submitted that the service of summons, which the process server swore was effected on a son-in-law of the appellant, was defective because the process server had not shown that the appellant could not be found.

Held:

1. Where there is no proper service of summons, then ex debito justitiae, a judgment by default must be set aside because such judgment can only be entered if there has been an initiating process concerning which a defendant is at fault.

2. A process server is required to make reasonable enquiries in order to serve the summons on the defendant personally. The affidavit of the process server was uninformative about his inability to find the appellant.

3. A service which is not entirely satisfactory and which might be set aside is capable of being cured and becoming a good service. It may be cured, as it was in this case, where the adult member of the family who has been served gives the summons to the defendant within time for the defendant to act.

4. The appellant bore the burden of disproving service and on the basis of the return of service and the affidavit of the process server, he did not discharge that burden.

5. The Court of Appeal should not interfere with the discretion of a judge acting within his jurisdiction unless he is shown to have applied the wrong principles.

6. The Court, in exercising its discretion to set aside the default judgment, would be guided by the rule that where the judgment has been obtained regularly, there must be an affidavit of merits, meaning that the appellant must satisfy the Court that he has a prima facie defence.

7. If there are merits in the defence, it would be unjust not to allow them to be heard, even if judgment was obtained regularly. On the other hand, if there are no merits, judgment should stand.

8. The appellant merely stated that he had a good defence; he did not put forward a defence. There was no ground upon which the Court could exercise its discretion to vary or discharge the judgment entered by default.

Appeal dismissed.

Cases

1. Kanji Naran v Ramji (1954) 21 EACA 20

2. Waweru v Kiromo [1969] EA 172

3. Evans v Bartlam [1937] 2 All ER 654

4. Mbogo v Shah [1967] EA 116

5. Patel v EA Cargo Handling Services Ltd [1974] EA 75

6. Amin Rasheed Shipping v Kuwait Insurance Co [1983] 1 All ER 873

7. Garcher v Jay (1885) 29 Ch D 50

8. M B Automobile v Kampala Bus Service [1966] EA 480, 484

9. Erukana Kavuma v ST Mehta [1960] EA 305

10. Pirbhai Lalji & Sons Ltd v Hassanali Devji [1962] EA 306

11. Robinson v Oluoch [1971] EA 376

Texts

Chitaley, DV & Rao SA The Code of Civil Procedure Vol II p 1670

Statutes

Civil Procedure Rules (cap 21 Sub Leg) order IXA rules 5, 10; order V rules 9, 12, 17

Kasmir Wesonga Ongoma & another v Wanga

Court of Appeal, at Kisumu September 8, 1987

Nyarangi, Platt & Gachuhi JJA

Civil Appeal No 25 of 1986

(Appeal from the High Court at Kakamega, Aganyanya J)

Civil Practice and Procedure - consent order – court recording a consent order without concurrence of the parties to the suit - whether an appeal lies against such consent –section 67(2) of Civil Procedure Act.

Civil Practice and Procedure – recording of proceedings – duty of a judge to make accurate record of proceedings.

The plaintiffs sued the respondent claiming that their deceased father and the defendant, a paternal uncle, held the suit piece of land in common with the defendant and that on the death of their fathers the defendant was left with the land to hold the same in trust for the beneficial interest of the plaintiffs. The respondent averred that he was not the only living paternal uncle of the plaintiffs and denied he held the suit land in common with the plaintiffs’ deceased fathers.

Gicheru J who heard the matter first referred it to arbitration by the District Officer with the help of four elders. The award of the arbitrators was set aside by consent and Aganyanya J ordered that the suit do proceed to hearing. At the end of the defendant’s evidence the court on its own motion ordered that the District Surveyor do visit the disputed land together with the District Officer and the parties to point out what belongs to whom and report to court.

There was nothing on record to show whether the courts orders were complied with and no evidence that the surveyor reported in detail to court. The court however recorded an alleged consent that the defendant do sub-divide the disputed land and give 30 acres to the first plaintiff and the second portion 25 acres to the second plaintiff.

The appellants appealed on the ground that no such consent was ever reached.

Held:

Platt JA dissenting

1. A consent judgment is a judgment the terms of which are settled and agreed to by the parties to the action.

2. In this case there was no evidence that terms were settled.

3. The High Court is a court of record whose proceedings are recorded to furnish a judicial record.

4. It cannot be said that the trial judge enabled court to have an accurate record of proceedings.

Appeal allowed.

Cases

1. R v Wilkes [1980] 1 All ER 284

2. Re Racal Communications Ltd [1980] 2 All ER 634

3. Brooke Bond Liebig (T) Ltd v Mallya [1975] EA 266

4. Wasike v Destimo Wamboki (1982-88) 1 KAR 625

5. Purcell v Trigell Ltd [1970] 3 All ER 671

6. Mullins v Howell (1879) 11 Ch D 763

7. Karani & 47 others v Kijana & others [1987] KLR 557

8. Kuria v Kelen Wahito Civil Appeal No NAI 19 of 1983 (unreported)

9. Hirani v Kassam (1952) 19 EACA 131

10. King v Michael Faraday (1939) 2 KB 753

Texts

1. Seton, H W Forms of Judgments and Orders in the High Court of Justice and Court of Appeal London: Stevens and Sons

2. Jacob, IH et al. (Eds) The Supreme Court Practice London: Sweet & Maxwell

Statutes

1. Civil Procedure Act (cap 21) section 67(2)

2. Supreme Court of Judicature Act (1925) [UK] section 31(1)(h)

3. Supreme Court of Judicature Act (1873) [UK] section 49

Ibrahim Okoyana Shiambiri v Ziporah Musi & another

Court of Appeal, at Kisumu June 20, 1987

Platt, Gachuhi JJA & Masime Ag JA

Civil Appeal No 142 of 1986

(Appeal from the High Court at Kakamega, Aganyanya J)

Succession – distribution of the estate of a deceased person – distribution before and after grant of letters of administration– deceased’s widow applying for revocation of grant – widow entering into consent judgment with administrator for distribution of part of the estate land–– whether consent order valid.

Civil Practice and Procedure– consent order – parties consenting to the carrying out of actions not allowed by law - whether such a consent order is null and void.

The appellant applied for and was granted Letters of Administration for the estate of a deceased person. The first respondent, as a widow of the deceased person, applied to revoke or annul the grant, claiming that theappellant had omitted important relevant material in his application. The parties, including the second respondent, later entered a consent order to the effect that certain land forming part of the deceased’s estate be subdivided into three equal parts and given to them, that land certificates be issued and that the parties were to comply with Land control Board requirements before the said subdivision.

The appellant appealed against the consent order claiming that it was against all the facts of the case.

Held:

1. There could be no distribution of the estate of the deceased whilst it was uncertain who the administrator or administrators actually were. If the grant to the appellant was to be revoked, then the registration of the land in his name was in doubt and if he had no sole grant, he would act unlawfully.

2. The first respondent could not agree to distribute the land before she had Letters of Administration.

3. Neither the appellant nor the first respondent could give a share of the land to the second respondent.

4. The parties could not agree to rectify the register before the consent of the Land Control Board had been given. They could agree to apply for the consent of the Board to the sub-division but rectification was a matter for the registrar of land.

5. It is not possible to enter into a consent judgment for an unlawful purpose and any such proceedings were therefore null and void.

Appeal allowed.

Cases

1. Burns v Campbell [1962] 1 KB 15; [1951] 2 All ER 965

2. Brooke Bond Liebig (T) Ltd v Mallya [1975] EA 266

Texts

Seton, H W (1912) Forms of Judgements and Orders in the High Court of

Justice and Court of Appeal London: Stevens & Sons 7th Edn p 124

Statutes

No statutes referred.

Mugunga General Stores v Pepco Distributors Ltd

Court of Appeal, at Kisumu June 18, 1987

Platt, Gachuhi & Apaloo JJA

Civil Appeal No 24 of 1986

(Appeal from a ruling and order of the High Court at Kisumu, Porter J)

Civil Practice and Procedure – summary judgment – mere denial of liability not sufficient in resisting an application for summary judgment – court’s discretion to refuse to set aside summary judgment – appellate court not to interfere with exercise of discretion unless it is wrong in principle - Civil Procedure Rules order XXXV.

The respondent/plaintiff filed a suit against the appellant/defendant claiming a sum of money owing on account of goods sold and delivered to the appellant. The respondent moved the court for summary judgment under the Civil Procedure Rules order XXXV and produced copies of dishonoured cheques which he claimed had been made by the appellant with a view to settling the debt.

Judgment was entered ex parte against the appellant, which he applied for the court to set aside, stating merely that he had traveled to the court on the material day and found that judgment had been entered and that he was prepared to defend himself as he had triable issues to raise. The judge observed that there was no merit in the defence and he declined to set aside the ex parte judgment.

The appellant appealed.

Held:

1. It is for the defendant to put forward his defence, and when he is faced with a motion for summary judgment under order XXXV, he must heed rule 2 thereof in that he must show either by affidavit or by oral evidence or otherwise that he should have leave to defend the suit. There was no defence put on record in this case.

2. It was not sufficient simply to deny liability without giving some reason. A mere denial was not a sufficient defence in this type of case. The defendant had to give a reason as to why he did not owe the money, such as the absence of contract or that payment had been made and could be proved.

3. The Court of Appeal will not interfere with the exercise of discretion of a trial judge, unless it is shown that the judge acted on the wrong principles. In refusing to set aside the summary judgment there was no fault of principle exhibited by the judge.

Appeal dismissed.

Cases

1. Shah v Mbogo [1967] EA 116

2. Evans v Bartlam [1937] 2 All ER 654; [1937] AC 437

Statutes

1. Civil Procedure Rules (cap 21 Sub Leg) order XXXV rules 2, 6

2. Bills of Exchange Act (cap 27) section 57