1.This ruling settles two applications. The first application is dated 31st July 2019 seeking orders to strike out the plaint and dismiss the Plaintiffs suit against the 3rd defendant or an alternative order that the plaintiff deposits security for costs in the sum of 20 million in favour of the 3rd failure of which the suit against the 3rd defendant be dismissed.
2.The application is based on the following grounds: -1.The plaint raises no reasonable cause of action against the 3rd defendant/applicant.2.There is no privity of contract between the 3rd defendant and the plaintiff.3.The suit is not compliant with the mandatory provisions of section 87 of the Kenya Railways Corporation Act Chapter 387.4.The Honourable court has no jurisdiction to take cognizance and determine the suit.5.Kenya is not a convenient forum for trying the suit herein.6.The plaintiff is a foreign entity with no known presence or assets within the jurisdiction of the honourable court.
3.The plaintiff opposed the application by grounds of opposition dated 12th November 2019 stating that: -1.The application is incompetent and fatally defective as the 3rd defendant has not sworn an affidavit in support of the prayers and the grounds in the application.2.The cause of action against the 2nd and 3rd defendants as pleaded in paragraph 19 of the Amended plaint dated 11/4/2019 is trespass to goods in that the 2nd and 3rd defendants purported to take possessions to take possession of the plaintiffs/applicants wagons and has been using them to transport goods in Uganda and Kenya.3.Under Order 26 rule 3 of the Civil Procedure Rules an order for security for costs cannot be made where it appears to the court that the substantial issue is which of two or more defendants is liable or what portion of liability two or more defendants should bear.4.Section 87 of Kenya Railways Corporation Act unconstitutional as it violates Article 48 of the Constitution which provides for the right of access to justice.
4.The 3rd defendant submitted that the plaintiffs claim for the alleged unpaid contractual balance does not affect it as it involved dealings between the plaintiff and the 1st defendant.
5.In a rejoinder, the plaintiff submitted that the its case against the 3rd defendant is for trespass to goods as the 3rd defendant purported to take possession of the plaintiff’s wagons and had been using them to transport goods in Uganda and Kenya.
6.Order 2 Rule 15 deals with striking out of pleadings and provides as follows;
8.Similarly, in Crescent Construction Co Ltd vs Delphis Bank Limited,  eKLR, the Court of Appeal emphasized the need for a court to exercise its discretion with utmost care when faced with an application for striking out a suit. The Court observed that striking out of a suit is a draconian action that may have the consequences of slamming the door of justice on the face of one party without according it an opportunity to be heard.
9.I have perused the amended plaint dated 11th April 2019 and I note that the plaintiffs claim that the 2nd and 3rd defendants took possession of its wagons without its consent. I find that plaint raises a reasonable cause of action against the defendant the details of which can only be unpacked during the trial. I also find that the issue of compliance of Section 87 of the Kenya railways Corporation Act and its constitutionality should be addressed during the hearing as it would require the interpretation and analysis of the facts that will presented to the court.
11.Turning to the alternative prayer for security of costs, the 3rd defendant submitted that it would not be able to recover the costs from the plaintiff in the event it succeeds in its defence as the 3rd defendant is a foreign entity with no known assets or office within the Court’s jurisdiction. The plaintiff, on the other hand, submitted that no orders for security of costs may be made where there are two defendants.
12.The law governing security of costs is set out under Order 26 of the Civil Procedure Rules which provides as follows: -
14.Further in Gatirau Peter Munya vs Dickson Mwenda Githinji & 2 Others, CA No. 38 of 2013  eKLR, the Supreme Court emphasized that: -
15.In Shah vs Shah  KLR 95 that; -
16.From the above-cited cases, it is clear that the power to order for security of costs is discretionary and ought to be exercised reasonably and judicially. The court has to consider the place of residence of the plaintiff, the conduct of the parties and the inability of the plaintiff to pay the costs. This court has to satisfy itself that it will be just to make an order of costs in the circumstances of each case.
17.It was not disputed that the plaintiff has no known assets within Kenya. The plaintiff’s stature as an international company resident outside the country is not disputed either. The applicant has however not demonstrated that the plaintiff will not be able to satisfy an order of costs. In Europa Holdings Limited vs Circle Industries (UK) BCLC 320 CA, it was held that it must be proved that the Plaintiff would not be able to pay the costs at the end of the case. Balancing the interests of the parties herein, I find that no material has been placed before this court to show that Plaintiff will be unable to meet its obligations for costs should it lose the suit
18.In the upshot, the application dated 31st July 2019 lacks merit and I therefore dismissed it with costs.
19.Through the Second application dated 5th March 2021, the applicant/2nd defendant seeks the following orders: -a.This honourable court be pleased to discharge and set aside the interlocutory judgment entered herein in default of appearance and all consequential decree orders and processes attendant theretob.This honourable court be pleased to grant the 2nd defendant/applicant an opportunity to be heard on the plaintiff’s claims herein and deem the defendant’s statement of defence attached herein to be properly filed upon payment of the requisite fees.c.The honourable court be pleased to grant any further orders as it may deem appropriate in the circumstances of this cased.The costs and incidentals of this application be provided for.
20.The application is supported by the affidavit of Nambasa Sarah Kasembe and is based on the following grounds: -1.The Plaintiff/Respondent ingeniously filed this case on 14th December 2018 seeking special damages and compensation arising from a contract negotiated, executed and performed in the Republic of Uganda between the Plaintiff and the1st Defendant.2.In the suit as filed before the Court, the Plaintiff failed to mention that the 2nd Defendant was neither a party to the subject agreement nor a participant in the subject contract.3.Upon filing the subject suit, the Plaintiff failed to properly serve the 2nd Defendant with Summons to enter appearance and the other statutory documents with the result that the Defendant did not enter appearance as required by the law.4.On 17th October 2019, the Plaintiff obtained judgment in default of appearance against the 2nd Defendant/Applicant for a colossal sum of USD 11,078,928.00 which is the equivalent of Kshs 1.2 Billion allegedly comprising of special damages arising from the 1st Defendants breach of contract together with interests.5.The exparte judgment in default appearance, obtained by the plaintiff herein is irregular and unlawful and he same has been procured against an innocent party who is neither privy to the contract the subject of the alleged breach nor a participant to the matters alleged to compromise the breach.6.The plaintiff/respondent failed to properly serve the 2nd defendant, which is a foreign entity ordinarily domiciled out of the court’s jurisdiction with the summons to enter appearance and suit papers herein including the plaint as required in law7.The 2nd defendant has a good defence to the plaintiff’s suit herein and wishes to be heard on the same. This honourable court will do substantive justice to the parties herein by setting aside the exparte interlocutory judgment and allowing the matter to be heard and determine on merit8.The subject ex- parte judgment is in the face of it irregular and unlawful for inter alia awarding a colossal prayer for special damages against the 2nd defendant who is not privy to the disputed contract.9.The plaintiff/respondent is likely to start the process of executing the unlawful exparte colossal judgment, which it is equally applying to harass the 2nd defendant and threaten it with possible bankruptcy proceedings10.The principles for setting aside interlocutory judgments are now settled and set out in the celebrate case of Patel vs East Africa Cargo Handling services Ltd  EA 75 which principles are as followsThat where there is a regular judgment as is the case here, the court will not usually set aside the judgment unless it is satisfied that there is a defence on the merits. In this respect, defence on the merit does not mean a defence that must succeed. It means a Triable issue” that is on issue it raises a prima facie defence which should go to trial for adjudication11.The 2nd defendant has a right both under the Constitution of Kenya 2010 and the Civil Procedure Act to defend itself against the plaintiffs unmeritorious claims herein, which rights should be protected by this honourable court by granting it an opportunity to be heard12.This application has been filed in good faith and without any delay and with the singular purpose of allowing this matter to proceed for trial on merit where both parties will give their evidence and allow the court to determine the matter13.The 2nd defendant/applicant will suffer great prejudice due to the colossal amounts herein and the nature of the matters in issue unless this Honourable Court intervenes and sets aside the interlocutory judgment herein14.The defendant has a good defence to the suit herein as demonstrated in the draft defence attached to this application.15.It is only fair, just and in the greater interest of justice that the judgment entered herein in default of appearance be set aside and the defense attached hereto be deemed to be properly on record upon payment of requisite fees.
21.The plaintiff opposed the application through the replying affidavit of its Senior Manager Mr. ALdarf Liu who states that it sought and obtained leave to serve the 1st and 2nd defendants by way of substituted service after which the defendants were served through DHL courier services. He faults the defendants for the inordinate and states that they are undeserving of the orders sought.
22.Order 10 Rule 4 (1) and (2) of the Civil Procedure Rules, 2010 provides as follows: -
23.A perusal of the plaintiff’s documents reveals that they served the 2nd defendant through DHL courier services in line with the provisions of Order 5 Rule 3 of the Civil Procedure Rules which provides as follows;
24.I find that service herein to the 2nd defendant was regular. The issue for determination whether the court can exercise its discretion to set aside the interlocutory judgment.
25.Order 10, rule 11 of the Civil Procedure Rules, it reads as follows: -
26.In the case of, Patel vs EA Cargo Handling Services Ltd (1974) EA 75, the Court held that: -
28.The principle that emerges from the above-cited cases is that the court’s discretion to set aside the interlocutory judgment is aimed at avoiding injustice to parties by giving them a chance to present their defence. I have perused the pleadings and I note that the amount involved is quite substantial and I am of the view that it will serve the ends of justice to allow the 2nd defendant to defend the case. I am also alive of the fact that there could have been challenges in effecting service of pleadings abroad. I have also had the benefit of reading through the draft defence, and I am of the view that it raises triable issues.
29.In the upshot, I exercise my discretion and set aside the interlocutory judgment entered on 17th October 2019 on the following terms: -i.The 2nd Defendants statement of defence shall be deemed to be properly filed and served upon payment of the prerequisite Court filing fees;ii.The Applicant shall serve the said statement of defence and counter claim within 14 days of this orderiii.In default of compliance with order given in (i) and (ii) then the order vacating the interlocutory judgment shall automatically lapse without further reference to the Court.
DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 28TH DAY OF APRIL 2022.W. A. OKWANYJUDGEIn the presence of: -Mr. Agwara for 2nd and 3rd defendantMr. Ondego for Plaintiff.Court Assistant- Sylvia