Ethics and Anti-Corruption Commission v Nobert t/a Firmline Company & 3 others (Anti-Corruption and Economic Crimes Civil Suit E017 of 2021)  KEHC 15726 (KLR) (Anti-Corruption and Economic Crimes) (24 November 2022) (Ruling)
Neutral citation:  KEHC 15726 (KLR)
Republic of Kenya
Anti-Corruption and Economic Crimes Civil Suit E017 of 2021
EN Maina, J
November 24, 2022
Ethics and Anti-Corruption Commission
Achiro Nobert t/a Firmline Company
Morris Kiwinda Mbondeni
Amos Kabue Mwangi
Frank Jackson Were
1.By a plaint dated June 9, 2021 the plaintiff sought a sum of Kshs 47,296,990.60 from the defendants jointly and severally.
2.By its own admission the 1st defendant/applicant was served with the plaint on June 9, 2021 and thereafter with summons to enter appearance on July 12, 2021.
3.The 1st defendant did not however enter appearance or file a defence and so on November 2, 2021 the plaintiff filed a request for judgment under order 10 rules 4(1) and 10 of the Civil Procedure Rules.
4.The record shows that the request was not acted upon until March 3, 2022 when the Deputy Registrar of this court entered a default judgment against the 1st defendant. By then and more specifically on February 2, 2022 the 1st defendant had filed a preliminary objection contesting the jurisdiction of this court to hear and determine the suit.
5.The preliminary objection is premised on grounds that in the absence of a compensation order granted under section 54(1) of the Anti-Corruption & Economic Crimes Act the plaintiff has no locus standi to institute this suit; that compensation orders can only be granted by a court which has tried and convicted the defendants for corruption or economic crimes as set out in section 54 of the Anti-Corruption & Economic Crimes Act and further that this court does not have jurisdiction to entertain ordinary civil suits such as the instant suit.
6.When the parties first appeared before me on March 10, 2022 Mr Oduor B, Learned Counsel for the 1st defendant, informed the court that he was not made aware of the default judgment and that he wished to bring an application to set it aside. This court granted him leave to do so whereupon he filed the notice of motion dated March 24, 2022. This court than gave directions that the application and the preliminary objection filed earlier would be heard together by way of written submissions.
7.This court received submissions from the plaintiff/respondent, the 1st defendant and also the 2nd and 3rd defendants although the latter two are not affected by the interlocutory judgment.
Analysis and Determination
8.Having perused the court record and having considered the preliminary objection, the notice of motion, the rival submissions of the Learned Counsel for the parties and the law I find the following to be the issues for determination:-1.Whether this court has jurisdiction to hear and determine this suit.2.Whether the application to set aside the judgment entered against the 1st defendant is merited.
Issue No 1 - Whether this court has jurisdiction to hear and determine this suit.
9.I shall start with the submission of Counsel for the 1st defendant/applicant which faults this court for entering the default judgment despite the preliminary objection. Order 6 rule 1 of the Civil Procedure Rules requires a defendant who has been served with summons to appear to enter appearance within the time prescribed in the summons. Thereafter the defendant is required to file his defence within fourteen days of entering appearance. On both occasions it is “unless some other or further order be made by the court”. In this case no other or further order had been made by this court to excuse the entry of appearance or filing of defence by the 1st defendant. Order 10 rules 4(1) and 5 provide for what ought to happen where a defendant fails to enter appearance and to file a defence and in regard to default of defence it states:-
10.The suit herein is for a liquidated amount only and the Deputy Registrar therefore acted procedurally by entering the default judgement. It is my finding that the judgment is a regular judgment.
11.As to whether the plaintiff/respondent has jurisdiction to file the suit I say it does as it is mandated under section 11(1)(ii) of the Ethics and Anti-Corruption Commission Act and section 55(3) of the Anti-Corruption and Economic Crimes Act to file proceedings for recovery of public funds on behalf of public entities.
12.As to whether such recovery proceedings can only be brought upon the conviction of the defendant for a corruption or economic offence my finding is that section 55(1) and (2) of the Anti-Corruption and Economic Crimes Act give the plaintiff power to file civil recovery proceedings irrespective of whether there are criminal proceedings pending section 193A of the Criminal Procedure Code recognizes that criminal proceedings and civil proceedings can run concurrently. Indeed in the case of Ethics and Anti-Corruption Commission v Judith Marilyn Okungu & Dakane Abduallhi Ali  eKLR the Court of Appeal castigated the judge who had done exactly what this court is being asked to do after hearing a preliminary objection very similar to the present one. The Court of Appeal stated:-
13.Counsel for the 1st defendant put reliance on the case of Registered Trustees of Sisters of Mercy (Kenya) t/a “Mater Misericordiae Hospital” v John Muriithi & 2 others  eKLR. However, the aforestated decision of the Court of Appeal seems not to have been brought to the attention of the judge hearing the above case and as the Court of Appeal decision is binding on this court, I shall not say more on the issue of concurrent proceedings.
14.On whether this court has jurisdiction to hear and determine this case given that it is a civil suit my finding is that it does. That jurisdiction flows firstly from article 165 (3)(a) of the Constitution which gives this court unlimited original jurisdiction in civil as well as criminal cases, the Civil Procedure Act and the Rules thereunder but also more especially from the Practice Directions for the Anti-Corruption and Economic Crimes Division gazetted by the Hon Chief Justice on July 26, 2018. I am surprised that Counsel for the 1st defendant did not take cognizance of Practice Directions 6(b), (d) and (e) which give this division the exclusive mandate to hear:-
15.The suit herein is one for recovery of public funds and therefore this court has the requisite jurisdiction to hear and determine it. The preliminary objection has no merit and it is dismissed.
Issue No 2 - Whether the application to set aside the judgment entered against the 1st defendant is merited.
16.Despite the judgment herein being a regular one order 10 rule 11 provides that the same may be set side or varied upon such terms as are just. The discretion of this court to set aside the judgment is therefore unfeterred. In the case of Waweru v Ndiga  KLR 236 the Court of Appeal held that the defendant is not even required to demonstrate sufficient reasons. It held: -
17.In an orbiter in the same case, Hancox JA gave an explanation that: the words “sufficient cause” appeared in rule 24 of the former order 1X which had been replaced by three new orders 1X, 1XA and 1XB.”
18.I notice that the current order 10 rule 11 does not have the words “must show sufficient reasons” why the judgment should be set aside and therefore in my view the same position that obtained in the case of Waweru v Ndiga (supra) still obtains and the 1st defendant need not to have shown sufficient reasons for setting aside the judgment.
19.Be that as it may it was held in the case of Shah v Mbogo & another  EA that nevertheless the discretion of the court should not be exercised to assist a party who had deliberately sought (whether by evasion or otherwise to obstruct or delay the cause of justice; that it ought to be exercised to avoid injustice or hardship resulting from accident, inadvertence, or excusable mistake or error.
20.There is no draft defence upon which I can determine whether the 1st defendant has a defence on the merits and while I also agree with Counsel for the plaintiff/respondent that Counsel for the 1st defendant has created a legal muddle by swearing the affidavit in support of the application, I do note that on March 10, 2022 this court granted leave to the 3rd and 4th defendants to file their defence out of time. While there may not have been a default judgment entered against them it would be unjust not to grant the 1st defendant a similar indulgence
21.My holding finds support in the words of Sheridan J in the case of Sebei District Administration v Gasyali & others  EA 300 that:-And in the case of Rayat Trading Co Limited v Bank of Baroda & Tetezi House Ltd  eKLR where the court held that:-
22.In the upshot the application to set aside the default judgment entered against the 1st defendant is allowed and the judgment be and is hereby set aside upon terms that the 1st defendant shall pay thrown away costs in the sum of Kshs 200,000 to the plaintiff before the hearing date and secondly that the 1st defendant shall file and serve its defence and all documents required of it, under order 7 rule 5 of the Civil Procedure Rules within 21 days of this ruling. The case shall be mentioned on December 19, 2021 to confirm compliance.
23.This ruling shall apply mutatis mutandis to the preliminary objections and the applications to set aside judgment in ACEC suits Nos E018 of 2021, E019 of 2021 and E020 of 2021.Orders accordingly.
SIGNED, DATED AND DELIVERED VIRTUALLY ON THIS 24TH DAY OF NOVEMBER, 2022.E N MAINAJUDGE