The High Court has jurisdiction to award compensation for commercial losses arising from violations of fundamental rights and freedoms

Kenneth Stanely Njindo Matiba v Attorney General

Petition No 94 of 2014

High Court at Nairobi

Constitutional and Human Rights Division

Isaac Lenaola, J

August 16, 2017

Reported by Beryl A Ikamari

Jurisdiction-jurisdiction of the High Court-the High Court's jurisdiction in the enforcement of fundamental rights and freedoms-claim in which compensation was sought for commercial losses arising from human rights violations-whether the High Court had jurisdiction to provide relief for commercial losses allegedly arising from violations of fundamental rights and freedoms-Constitution of Kenya 2010, articles 22 & 23.

Constitutional Law-fundamental rights and freedoms-freedom of movement, right to personal liberty and freedom from torture, cruel and inhuman treatment-circumstances in which fundamental rights and freedoms would be said to have been violated-detention without trial, denial of medical treatment, solitary confinement, exposure to cold weather and exposure to condemned prisoners whose behaviour included continuous shouting and screaming.

Constitutional Law-enforcement of fundamental rights and freedoms-remedies for violations of fundamental rights and freedoms-compensation for commercial losses arising from violations of fundamental rights and freedoms-effect of intervening factors that could have contributed to the commercial losses-assessment of the extent of liability for the commercial losses.

Brief facts

After a press conference in which he agitated for a repeal of section 2A of the then Constitution and multi-party democracy, the Petitioner was arrested on July 4, 1990 and locked up at Lang'ata Police Station. He was served with a detention order which stated that he was detained because he was involved in subversive activities aimed at overthrowing the Government and it was necessary to detain him in order to preserve public security.

During his detention, the Petitioner stated that he was subjected to torture, inhuman and degrading treatment. He said that he slept on the floor and was exposed to cold weather without having warm and protective clothing. He added that he was subjected to solitary confinement for more than five months and that he was transferred to a block where there were condemned prisoners who engaged in loud, tortured  screams and shouts throughout the day and night, which affected him psychologically.

The Petitioner stated that while on detention, he was subjected to a poor diet which was unsuitable for his state of health. He explained that he had a mild blood pressure condition prior to his detention which was poorly managed during detention and it escalated to a stroke from which he did not fully recover.

The Petitioner stated that due to the detention and poor health, he was no longer physically fit and his businesses suffered greatly causing him immense financial loss. He was no longer able to dedicate time and make crucial decisions in the interests of his business empire.

Issues

1. Whether the Court had jurisdiction to entertain a claim based on articles 22 and 23 of the Constitution in which it was alleged that commercial losses had been caused by violations of fundamental rights and freedoms.
2. Whether the Petitioner's fundamental rights and freedoms were violated in his arrest and subsequent detention.
3. Whether the Respondent was liable for the deterioration of the Petitioner's business portfolio which allegedly resulted from the Petitioner's arrest, detention and failing health.
4. What remedies was the Petitioner entitled to?

Held

1. The Petition was about alleged violations of sections 70(a) & (b), 72(1), 74 (1), 78 (1), 79 (1), 80(1) and 81 (1) of the repealed Constitution in relation to the Petitioner and his business enterprise. Under section 84(2) of the repealed Constitution, an order for compensation was among the forms of redress available where a party proved that his or her rights had been infringed. It was irrelevant whether the Petitioner's claim possessed characteristics of a commercial nature as long as it was a claim seeking to enforce the Bill of Rights.
2. The right to freedom of movement and personal liberty were not absolute and they could be limited in circumstances where a person was held in lawful detention. Detention without trial was sanctioned under the repealed Constitution.
3. Regulation 6(1) of the Public Security (Detained and Restricted Persons) Regulations, 1978, gave the relevant Minister power to order the detention of a person, if the Minister was satisfied that such action was in the interest of preservation of public security. It was in the exercise of those powers that the impugned detention order was issued.
4. Under section 72 of the repealed Constitution, a person was to be held in police custody for at least 24 hours for a misdemeanour and for 14 days for a capital offence before being taken to Court. The Petitioner was held for one night before the detention order was issued and therefore his rights under that provision were not violated.
5. Given that the right to personal liberty was not infringed and the existing law on detention was properly applied, the limitations to the freedoms in sections 70, 78, 79 and 80 of the repealed Constitution were justifiable under the circumstances.
6. Not every prison condition amounted to torture and inhuman treatment especially where treatment was equally experienced by other prisoners. However, there were peculiar circumstances in the Petitioner's detention. For example, he was subjected to solitary confinement and was held in a block where condemned prisoners screamed and shouted at each other from dusk to dawn. Those conditions inflicted deep psychological wounds. There was an admission from the Respondent in relation to solitary confinement and the Petitioner's stay in the block near the condemned prisoners. Therefore, the Petitioner was subjected to torture, cruel and inhuman treatment which affected his physical, mental and psychological well-being.
7. There were allegations that prison authorities administered poison to the Petitioner's food. The allegations of food poisoning were not sufficiently proved by the Petitioner.
8. The question as to whether the Respondent omitted to take key steps to guard against deterioration of the Petitioner’s health was of relevance. There was evidence that when the Petitioner exhibited signs of illness a doctor was allowed to visit him and administer medication and collaboration between the prison doctor and the Petitioner's doctor was allowed. Despite there being such allowances, there was scanty evidence of actual collaboration between the doctors and there were indications that the prison doctor was hardly availed to check on the Petitioner's health.
9. An unfortunate series of events contributed to the gravity of the Petitioner's illness. The Petitioner's blood pressure readings were not regularly recorded and the Respondent failed to yield in a timely manner to advice that a CT scan needed to be done in the Petitioner's case. Even after the CT scan which showed bleeding in the Petitioner's brain was done, the Respondent failed to allow the Petitioner to commence emergency treatment in a bid to revive his health. Therefore, to the extent that he was denied medical treatment, the Petitioner was subjected to torture, cruel and inhuman treatment.
10. A company is a separate legal entity from its shareholders and it ought to sue in its own name. Generally, a director or shareholder would be unable to sue for a loss suffered by the company. Although a shareholder is a distinct entity from a company, a shareholder can claim for loss suffered by the company where it is proved that the loss is also a personal loss on the shareholder.
11. The Petitioner's medical condition which was triggered during detention greatly affected the business acumen, attention, focus, energy, guidance and leadership he was giving his companies and without him at the helm, they deteriorated and some eventually collapsed. Other factors such as a slump in the tourism industry also affected his businesses. It was also noteworthy that the Petitioner held shareholding amounting to 29%, 50%, 68% or 96% and the role of the other shareholders was not explained.
12. The Petitioner would not be entitled to the entire cost of refurbishing his hotels (Safari Beach Hotel) as the deterioration in the business was not wholly due to his absence but general business and trade conditions were also a potential factor.
13. Whereas the Petitioner made a claim for the entire worth of his collapsed business, amounting to Kshs.4,726,332,042.91, there were factors mitigating against 100% liability on the part of the Respondent. Compensation amounting to 20% of the Petitioners claim, being Kshs.471,664,258.50 based on a fair and reasonable assessment of the claim was appropriate.
14. Exemplary damages were not awardable in situations of changed political circumstances. The Court would therefore not award exemplary or aggravated damages.

Petition allowed.

Orders:-

1. A declaration, to the effect that the Petitioner’s right to be free from torture, cruel and inhuman treatment under section 74(1) of the repealed Constitution was violated by agents of the State, was issued.
2. The Petitioner was awarded Kshs. 15,000,000/= as general damages for violations of the right to freedom against torture, degrading and inhuman treatment.
3. The Petitioner was awarded Kshs. 18,146,631.52/= as the cost of medical expenses.
4. The Petitioner was awarded Kshs.471,664,258.50/= as compensation for financial losses occasioned to him through collapse of his businesses and financial ventures.
5. For avoidance of doubt no other damages or costs were awarded to the Petitioner. The total sum awarded as damages was Kshs. 504,810,890.02/=
6. As the successful litigant, the Petitioner was awarded costs of the suit plus interest.

Legal Notice No. 61 of 2016 which revised company registration fees is null and void and legally defective for lack of public participation and non-compliance with the Statutory Instruments Act

George Ndemo Sagini v Attorney General & 3 others

Petition No 176 of 2016

High Court at Nairobi

Constitutional and Human Rights Division

Isasc Lenaola, J

July 12, 2017

Reported by Beryl A Ikamari

Constitutional Law - national values and principles of governance - public participation - principles related to public participation - what the requirement for public participation would entail - circumstances under which the requirement of public participation would not be met - making of an enactment without undertaking consultations with stakeholders or the public - Constitution of Kenya 2010, article 10

Statutes - Statutory Instruments Act - Parliamentary scrutiny of statutory instruments - laying of statutory instruments before Parliament - effect of failure to lay a Legal Notice before Parliament within the prescribed period - Statutory Instruments Act, No 23 of 2013, section 11

Constitutional Law - Office of the Attorney General - difference between the Attorney General and a Cabinet Secretary - whether the Attorney General could serve the role reserved for a Cabinet Secretary in enacting subsidiary legislation under section 1022 of the Companies Act 2015 - Constitution of Kenya 2010, article 132(2) and Companies Act, No 17 of 2015, section 1022.

Brief facts

The Petitioner complained of a sudden increase in fees charged for the registration of companies via Legal Notice No 61 of 2016. The effect of the Legal Notice was that the Registrar of Companies would charge a flat figure of Kshs.10,000.00 irrespective of the company’s share capital for the registration of a company. The previous registration fee for companies with a share capital of less than Kshs. 100, 000/= was Kshs. 4, 050/=.

The Petitioner stated that the Legal Notice was made without public participation contrary to the requirements of article 10 of the Constitution. He stated that the Law Society of Kenya, persons involved in registering companies and other stakeholders were not consulted before the Legal Notice was made. He also stated that contrary to the requirements of sections 5, 6, 8, 9 and 11 of the Statutory Instruments Act, the approval of the National Assembly was not sought before the Legal Notice was enacted. The Petitioner also said that contrary to section 1022 of the Companies Act 2015, the Legal Notice was made by the Attorney General and not the relevant Cabinet Secretary.

The Respondent explained that the registration fees were revised under the Ease of Doing Business initiative. Previously, the registration fee under the Companies (General) Regulations, 2015 ranged from Kshs. 4,000.00/= to Kshs. 62,200.00/=. The Respondent said that the intention in revising the fees was to standardize and lower the cost of registering companies to make it convenient and cheaper.

Issues

i) Whether the requirement of public participation was fulfilled in the making of Legal Notice No 61 of 2016.

ii) Whether Legal Notice No 61 of 2016 was laid before Parliament as stipulated under section 11 of the Statutory Instruments Act.

iii) Whether the Attorney General could serve a role assigned by statute to a Cabinet Secretary.

Held

1. Section 1022 of the Companies Act 2015 granted the relevant Cabinet Secretary the mandate to make subsidiary legislation which included determinations on fees payable for registration of companies. Under article 132(2) of the Constitution, the Attorney General was not a Cabinet Secretary but he sat in the Cabinet as the legal advisor to the Government. Therefore the Attorney General did not have the mandate to issue the Legal Notice.
2. Some of the principles emerging from case law on public participation include;

1. That there is no template for public participation applicable to every situation and what is required is that the public and all Interested Parties are given a reasonable opportunity to know about an issue and make representations on it.
2. What amounts to a reasonable opportunity depends on the circumstances of each case and the quality of the opportunity and material proposals made.
3. The representation would be of diverse interests.
4. A flexible approach is necessary for the variations that existed, for example, population density, literacy trends, media use and distance from the centre.
5. For the participation to be meaningful, citizens would have to have the capacity to understand the issues at hand.
6. It did not matter that elected representatives would have the final say in the matter.
7. Public participation is direct and through representatives.

3. Prior to the publication and enactment of the impugned Regulations, neither the Petitioner, as a person engaged in the business of registering companies, nor the Law Society of Kenya, were consulted as required by the law.  The Legal Notice entailed an important matter which required the input of stakeholders, affected and interested parties but none was sought and none was given and therefore the principle of public participation was breached.
4. Section 11(4) of the Statutory Instruments Act clearly provided for the consequences for the failure to lay the instrument before the National Assembly within the stipulated period and the consequences were that the statutory instrument would cease to have effect immediately after the last day for it to be so laid but without prejudice to any act done under the statutory instrument before it became void. The Legal Notice needed to be laid before Parliament within 7 days after its publication and on the eighth days after its publication it became void. In the making of the Legal Notice there was no compliance with the requirements of the Statutory Instruments Act.

Petition allowed.