The Constituencies Development Act, 2013, declared unconstitutional for violating the constitutional principles of separation of power, accountability, good governance public finance and division of revenue

Brief facts

Aggrieved by the enactment of the Constituencies Development Fund Act, 2013 (CDF Act, 2013) and the Constituencies Development Fund (Amendment) Act No. 36 of 2013 (CDF Act, 2013), two petitions, which were consolidated, were filed at the High Court by the appellants. The consolidated petitions challenged the constitutionality of the CDF Act 2013. The High Court determined that the CDF Act, 2013 was unconstitutional and held that the CDF Act, 2013, was passed without the involvement of the Senate. The High Court established that the constituencies development fund (CDF) was not a conditional grant to the county governments within the meaning of article 202(2) of the Constitution of Kenya, 2010.

The High Court also held that the CDF Act, 2013, violated the division of functions between the National and County Government, the court found that in as much as the National Government was free to infiltrate its policies at the county levels, it had to do so through the structures recognized under the Constitution and those that did not run parallel to them. The court also noted that charging the CDF with implementing local development projects under section 22 of the CDF Act, 2013, upset the division of functions between the two levels of government. 

Aggrieved with the judgment of the High Court, the 1^st and 4^th respondents filed appeals at the Court of Appeal. The appellants raised a preliminary objection to the appeals challenging the Court of Appeals jurisdiction on the ground of the doctrine of mootness. They urged that the appeals had been rendered moot following the repeal of the CDF Act, 2013 and the enactment of the National Government Constituencies Development Fund, 2015 (NGCDF Act, 2015). 

The Court of Appeal partially allowed the appeals, by declaring sections 24(3)(c), 24(3)(f), and 37(1)(a) of the CDF Act, 2013 unconstitutional and invalid for violating the principle of separation of powers. The court also overturned the declaration, that the CDF Act, 2013, was unconstitutional in its entirety. The Court of Appeal also held that the NGCDF Act, 2015, did not expressly repeal the CDF Act, 2013. Dissatisfied with the Court of Appeals decision, the appellants filed the instant appeal. The 1^st respondent also filed a notice of cross-appeal.

Issues

1. Whether the Constituencies Development Act, 2013, violated the division of functions between the national and county levels of Government by sharing revenue raised nationally to constituencies.
2. Whether failure to involve the Senate in the enactment of the Constituencies Development Fund (Amendment) Act, 2013, rendered the Constituencies Development Fund Act, 2013 unconstitutional. 
3. Whether allowing a Member of the National Assembly to play a role related to functions vested in devolved units compromised division of powers between the National and County Governments. 
4. Whether the Constituency Development Fund, which was distributed to constituencies, amounted to an inter- governmental transfer of functions.
5. Whether the Constituencies Development Act, 2013 violated the constitutional principles on public finance by requiring the Cabinet Secretary responsible for matters relating to the CDF in allocating the fund to seek concurrence of the relevant parliamentary committee. 
6. Whether granting of Members of the National Assembly the power of appointment of members of the constituency development fund committee and being an ex-officio member of the committee amounted to a violation of values and principles of accountability and good governance. 
7. What was the nature of the principle of subsidiarity? 
8. When would a matter be considered to be moot? 
9. What was the logic, scope and application of the doctrine of separation of powers in the Constitution of Kenya, 2010?
10. Whether the Constitution envisaged a model for separation of powers that was without overlaps in the discharge of mandates by different branches of government. 
11. Whether allowing a Member of the National Assembly to play a role related to functions vested in devolved units compromised the principle of separation of powers

Held

1. A matter was moot when it had no practical significance or when the decision would not have the effect of resolving the controversy affecting the rights of the parties before it. If a decision of a court would have no such practical effect on the rights of the parties, a court would decline to decide on the case. There had to be a live controversy between the parties at all stages of the case when a court was rendering its decision. If after the commencement of the proceedings, events occurred changing the facts or the law which deprived the parties of the pursued outcome or relief then, the matter became moot. Where a new statute was enacted that unequivocally addressed the concerns that were at the heart of a dispute then such a dispute would be moot.
2. Sections 3, 4 and 53 of the NGCDF Act, 2015 contained some of the pertinent issues that were raging controversies before the Court of Appeal for determination even after the coming into force of the NGCDF Act, 2015. The impugned provisions of the CDF Act 2013 had also been re-enacted in the NGCDF Act, 2015, it did not unequivocally settle the issues in dispute between the parties. There was live controversy between the parties and it was in the public interest to have the questions that were raging adjudicated and determined by the Court of Appeal. The appeal before the was not moot.
3. Applying a purposive interpretation, the amendment in section 2 CDF (Amendment) Act, 2013 of the touched on the main object and purpose of the CDF Act, 2013, which was to ensure that a specific portion of the national annual budget was devoted to the constituencies for inter alia community projects and infrastructural development. Essentially, the amendment had the effect of changing the constitutional basis for the fund from being an additional revenue to the county governments from the National Government under article 202(2) of the Constitution; to transforming the CDF into a fund of the National Government under the consolidated fund established under article 206(2) of the Constitution.
4. The Court of Appeal was at fault for a restrictive approach in interpreting the law to hold that the Bill in its objects indicated that it did not concern county governments. The replacement of article 202 of Constitution with article 206(2) had an effect on the allocation of revenue to the county governments. The CDF (Amendment) Act, 2013 had an effect on the functioning of county governments.
5. A matter touching on county government incorporated any national-level process bearing a significant impact on the conduct of county government. Some of the functions contemplated by section 3 of the CDF Act, 2013, concerned county governments. Therefore, the CDF (Amendment) Act, 2013 should have been tabled before the Senate in accordance with article 96 of the Constitution for consideration.
6. While the concurrence of the Speakers of the National Assembly and the Senate was significant in terms of satisfaction of the requirements of article 110(3) of the Constitution it did not by itself oust the power of the court vested under article 165(3)(d) of the Constitution where a question regarding the true nature of legislation in respect to article 110(1) was raised.
7. The CDF (Amendment) Bill, 2013 involved matters concerning county governments and therefore the Bill should have been tabled before Senate for consideration, debate, and approval in accordance with article 96 of the Constitution. Failure to involve the Senate in the enacting of the CDF (Amendment) Act, 2013, rendered the CDF Act 2013 unconstitutional. The Constitution did not create a federal State but a unitary system of government that decentralized key functions and services to the county unit.
8. Article 6(2) of the Constitution provided that the governments at the national and county levels were distinct and interdependent and should conduct their mutual relations on the basis of consultation and cooperation. In addition, article 186(1) of the Constitution stated that the functions and powers of the National Government and county governments would be as set out in the Fourth Schedule to the Constitution.
9. Parliament was one of the arms of the Government under the Constitution. It consisted of the Senate and National Assembly. The legislative remit of the National Assembly fell under the National Government in the vertical division of powers between the National Government and the county governments. That was evident from article 95 of the Constitution which provided for the roles of the National Assembly
10. From article 95 of the Constitution, the Constitution did not grant the National Assembly the power to implement projects as a service delivery unit at the county level. Members of the National Assembly were granted the mandate to legislate and oversight the national revenue and its expenditure.
11. Article 1(4) of the Constitution stipulated that the sovereign power of the people was exercised at the national level and the county level. In addition, the Constitution established the county executive committee as the executive authority in the county government. Article 179(1) of the Constitution stated that the executive authority of the county was vested and exercised by, a county executive committee. It meant that the service delivery mandate, which in its essence was an executive function, relating to functions assigned to the county governments ought to be exercised by the county executive committee.
12. Members of National Assemblys legislative mandate was linked or tied to the National Government and not the county governments. Therefore, where a Member of the National Assembly was allowed to play a role related to functions vested in devolved units, then that would compromise the vertical division of powers between the National and County governments.
13. The determinate phrase of section 22(1) of the CDF Act 2013 which listed the projects for which the Fund was to be deployed, was "community based". Community-based was not defined anywhere in the statute. A look at the Fourth Schedule to the Constitution (pursuant to the terms of article 186(1) of the Constitution) that distributed functions between the National Government and the county governments, showed that it was the county governments that were allocated most of the functions and powers that could be said to be community or local in orientation. Examples of such functions and powers included those relating to county health services, county transport, trade development, county public works and services, pre-primary education, and village polytechnics, amongst others. In contrast, to a large extent, the functions and powers of the National Government with respect to most of those functions related to policy formulation.
14. The approach in the fourth schedule to the Constitution resonated with the principle of subsidiarity which underpinned the division of powers under devolved systems of Government. Subsidiarity was the broad presumption that sub-national governments ought to be assigned those functions and powers which vitally affected the life of the inhabitants and allowed the development of Kenya in accordance with local conditions of sub-national units, while matters of national importance concerning Kenya as a whole and overarching policy formulation were assigned to the National Government.
15. The implementation of community-based projects envisaged under section 22 of the CDF Act, 2013, and the infrastructural development projects envisaged under section 3 of the CDF Act, 2013, would inevitably cover and target the functions assigned to county governments.
16. The CDF did not amount to an inter- governmental transfer of functions. The Constitution paid keen attention to ensure that the National Government did not usurp the mandate of county governments by specifying a clear process for the transfer of functions from a county government to the National Government. Article 187(1) of the Constitution stipulated that a function or power of government at one level could be transferred to a government at the other level by agreement between the governments.
17. The instant dispute subject did not involve the transfer of functions by agreement between governments as contemplated under article 187(1) of the Constitution. Instead, it was a dispute about alleged constitutionally forbidden encroachment by an agency of the National Government onto the terrain of the county governments.
18. Under article 1(4) of the Constitution, the sovereign power of the people was exercised at the national level and the county level. The functions of service delivery which was the character and nature of community-based projects targeted by the CDF Act, 2013, were by nature Executive functions. Accordingly, by nature they would be discharged by the Executive structures of the appropriate level of Government in terms of article 1(3) (b) of the Constitution which vested Executive functions in the National Executive and the executive structures in the county governments.
19. The constituency as conceptualized in the Constitution was tied to political representation. Throughout the Constitution, the idea of constituency whenever it was used was linked to being an electoral unit for political representation. In its true essence, a constituency was a form of territorial districting that defined how voters were grouped for the election of Members of Parliament and were not conceptually envisaged to be service delivery units.
20. The role that a constituency as an electoral unit discharged and its place within the constitutional scheme was tied to the functions constitutionally vested in the Member of the National Assembly. That role was a legislative role and not a service delivery mandate. The constituency under the constitutional scheme was tied to the election of representatives to the Legislature and representation of the people of the constituency at the National Assembly.
21. The decentralization of service delivery must be undertaken within the confines of the structures of the National Government or county governments, not parallel to the two levels of Government. A third or parallel structure of Government was altering the basic premises of the system of Government created by the Constitution and as distorting the devolved structure of Government. That was more so in a context such as the CDF fund which had the effect of creating structures that were incompatible with the nature of the distribution of functions between the two levels of Government. The CDF Fund which had the effect of creating structures that were incompatible with the nature of the distribution of functions between the two levels of government. The CDF Act, 2013, violated the division of functions between the national and county levels of Government.
22.  A key concern behind the enactment of article 202(1) of the Constitution which stipulated that revenue raised nationally should be shared equitably among the two levels of government, was to ensure the optimal funding and working of the devolved system of government. What was contemplated by articles 202(1) and 218(1)(a) of Constitution was that revenue raised nationally was all the revenue accruing from all the revenue-raising powers of the National Government. Revenue raised nationally was synonymous with what was termed equitable share and was allocated between the two levels of Government. Prior to allocation, the revenue was not yet available to the National Government to allocate to its agencies. Only after the National Government had received its portion of the equitable share under the Division of Revenue Act as envisaged in article 218(1)(a), would be in a position to allocate funds to agencies and instrumentalities falling under its mandate.
23. The National Government and county governments were the only entities entitled to participate in the vertical division of the revenue raised nationally. To allow an agency of the National Government or a third structure whose location within the constitutional system was unclear to participate in the sharing of the revenue raised nationally was a violation of not only article 202(1) but also article 218(1)(a) of the Constitution.
24. Section 4 of the CDF Act, 2013, violated the provisions of the Constitution as it sought to disrupt the revenue sharing formula by directly allocating 2.5% of all the national revenue while the Constitution required that the revenue raised should be shared equitably among the National and County Governments. If at all any monies was to be deducted from the national revenue, the money should be granted from the National Government revenue as a grant but not directly from the national revenue. The CDF Act, 2013, violated the principles of the division of revenue as stipulated in article 202(1) of the Constitution.
25. Article 201 of the Constitution expressed the idea of responsible governance. It envisaged that the two levels of Government would manage fiscal resources prudently by putting in systems that ensured that the implementation of projects aimed at delivering a public good and service was cost-effective. It also embodied the desire for fiscal efficiency which spoke to the need to eliminate wastages in service delivery and provision of public good and service. It meant that where it was a policy objective of the Government to deliver a particular public good or service then the system for delivery of that policy objective should be designed in a manner that ensured that public funds were not wasted or abused
26. There was a real threat of the CDF creating confusion as to which project was being implemented by which level of Government. In addition, it created the prospect of duplication of funding for the same project leading to wastage of scarce public resources. It created a state of lack of clarity as to which level of Government was responsible for which particular project therefore compromising on accountability.
27. There should be clarity in the allocation and assignment of tasks to avoid duplication in the deployment of resources. That would avoid the problem of the two levels of the government ending up directing and spending resources on the same project.
28. There was a real threat of the Fund creating confusion as to which project was being implemented by which level of government. It created the prospect of duplication of funding for the same project leading to wastage of scarce public resources. It created a state of lack of clarity as to which level of government was responsible for which particular project therefore compromising on accountability.
29. While the court appreciated the concerns that motivated the creation of the CDF and public support for it, there were more effective ways of decentralizing funding to the local level without compromising on key constitutional principles like those of public finance.
30. Even though the CDF (Amendment) Act, 2013 provided that the monies under the Act should be considered as funds allocated under article 206(2)(c) of the Constitution, under section 10 of the CDF Act, 2013, the Cabinet Secretary responsible for matters relating to the CDF in allocating the fund for each financial year had to seek concurrence of the relevant parliamentary committee. That violated the principles of accountability and integrity due to likely conflict of interest. That was because a Member of Parliament could not oversee the implementation or coordination of the projects and at the same time offer oversight over the same projects. The CDF as structured under the CDF Act, 2013, violated the constitutional principles on public finance, particularly the principle of prudent and responsible management of public funds as enshrined in article 201(d) of the Constitution.
31. The doctrine of separation of powers was a fundamental principle of law that required the three arms of Government to remain separate, and that one arm of Government should not usurp functions belonging to another arm. Article 1(3) of the Constitution delegated power vertically and horizontally to State organs namely, Parliament and the legislative assemblies in the county governments, National Executive and the executive structures in the county governments, and Judiciary and the independent tribunals. Therefore, the Constitution required that each level of Government have both institutional and functional distinctiveness from each other.
32. Modern democracies did not all employ the same form of separation of powers structuring. Separation of powers was never conceived as involving a perfect and hermetically sealed division of responsibility between the three branches of government.
33. The doctrine must still have an analytical bite and there would be instances when it could be concluded that structuring of governmental powers violated or failed to embody the ethos represented by the doctrine of separation of powers. While modest modifications and deviations from the pure version would not infringe the doctrine of separation of powers, where the Legislature structured a public agency or institution in a manner that deviated too far from the pure version then it was likely that the separation of powers would have been violated. Whilst the pure version of the doctrine of the separation of powers was not adhered to in practice, it still remained true that it represented a bench-mark or an ideal-type.
34. The Constitution consciously provided for a structure of government consisting of three balanced branches within the framework of a representative democracy. The separation of powers ought not to be treated or viewed as an end in itself but aimed at the fulfillment of the form of governance and vision of the state that Kenyans aspired to as represented in the national values and principles of governance under article 10 of Constitution.
35. Kenya had a value-based Constitution. The organizational framework of governance served the purpose of furthering the goal of realization of the national values and principles articulated in the Constitution. The values and principles were not self-executing, rather they were realized through the institutional fabric woven throughout the Constitution including through the separation of powers that undergird the organizational structure of governmental power.
36. The Supreme Court adopted a two-pronged test to be used in assessing whether a particular allocation of mandate, function, or power to a public agency or institution amounted to an unconstitutional intrusion that threatened or violated the separation of powers. The two limbs of the test were:
    1. whether the mandate, functions or powers of the subject state agency, or institution unjustifiably strays into the nucleus, core functions, or pre-eminent domain that were the exclusive competence of another branch of government from a functional point of view.
    2.  Whether the exercise of the subject assigned mandate, functions, or powers will harm or threaten the realization of the national values and principles articulated in the Constitution.
37. The impugned section 22(3)(c) of the CDF Act, 2013, envisaged that the Member of the National Assembly was to appoint eight (8) of the ten (10) members of the constituency development fund committee. That was in addition to section 24(3)(f) of the CDF Act, 2013, which made the Member of the National Assembly an ex-officio member of the committee. The Blacks Law Dictionary defined an ex-officio member as a member appointed by virtue or because of an office and explained that an ex-officio member was a voting member unless the applicable governing document provided otherwise. As the CDF Act, 2013, did not provide otherwise, a Member of the National Assembly who was a member of the committee by virtue of his office as a Member of National Assembly was a voting member.
38. It was the constituency development fund committee that was vested with the responsibility of initiating the process for identification and prioritization of the projects, employment of staff, allocation of funds to various projects, the tabling of reports and monitoring the implementation of the projects. Two of its members were among the three signatories to the bank account. The projects implementation committee which implemented the projects works under its direction. Those were typical service delivery mandates that fell within the constitutional mandate of the Executive branch.
39. The power of appointment of the members of the constituency development fund committee and being an ex-officio member of the committee, the Member of the National Assembly was in effective control of the constituency development fund committee and that meant that he/she influenced the selection, prioritization of projects, allocation of funds and also monitored the implementation of the projects. That meant that the fund as conceived under the CDF Act, 2013, vested in the Legislature and its personnel being the Members of the National Assembly, functions that typically fell within the nucleus, core function, or pre-eminent domain of the Executive branch.
40. The national values and principles idea of good governance and accountability represented the aspiration that a person in a position of public trust should not make decisions regarding questions on which they had an interest. Put differently, all State and public officers should avoid conflict of interest in the discharge of their mandate.
41. As conceived and structured under the CDF Act, 2013, Members of the National Assembly would have a personal interest or stake in the determination and implementation of projects by the fund in their constituencies. The perceived failure or success of the fund within their constituency would also influence their prospects of re-election. What that state of affairs did, was that, it created a conflict of interest with the Member of Parliaments oversight role.
42. All State and public officers should avoid conflict of interest in the discharge of their mandate. As conceived and structured under the CDF Act 2013, Members of the National Assembly would have a personal interest or stake in the determination and implementation of projects by the Fund in their constituencies. The perceived failure or success of the Fund within their constituency will also influence their prospects of re-election. That state of affairs created a conflict of interest with the Member of Parliaments oversight role. 
43. The very fact that the success or failure of the CDF Fund would be linked to the Member of the National Assembly created a perverse incentive of self- interest in the Members of the National Assembly not to undertake the robust oversight mandate envisaged by the Constitutionover the Fund thus inimical to the national values and principles of accountable and good governance.
44. Given the constitutional edict in article 259(1)(a) and (d) that the Constitution should be interpreted in a manner that promoted its purposes, values, and principles, and contributed to good governance. Adopting an interpretation that allowed conflict of interest undermined the oversight role of the Legislature. Allowing legislators any role, even a merely ceremonial role in discharging a mandate that belonged to the Executive branch at either the national or the county level, would promote conflict of interest and compromise their oversight role. Therefore, the CDF Act, 2013 violated the values and principles of accountability and good governance.
45. A fund operating outside the strictures of separation of powers and the system of checks and balances would not be constrained given the absence of legislative oversight and therefore would be prone to be abused. In effect, a fund that allowed personnel from the legislative branch to exercise Executive powers was problematic from a constitutional lens. In the context of the case, the constitutional scheme on separation of powers should be upheld given its implication for underlying constitutional values; that was the maintenance of accountability and good governance. Were the court to adopt a contrary approach, even for the best of policy reasons, those constitutional values and principles would be eroded.
46. Given the constitutional scheme on separation of powers; members of legislative bodies, being members of the National Assembly, senators, county women representatives, and members of county assemblies ought not to be involved in the implementation of any service-based mandates which were a preserve of the Executive branch. That was the only way to respect the constitutional scheme on separation of powers and ensure that the legislators oversight mandate was not compromised through conflict of interest. Tolerating a contrary position would harm the Constitutions value system, particularly the national values and principles of accountable and good governance. The fund as structured violated the vertical separation of powers.
47. The fact that the CDF had been operational in Kenya since 2003 was not a good enough answer to the question on the constitutionality of the fund in the post-2010 constitutional dispensation. A fund directed at service delivery mandate could only be constitutionally complaint if structured in a manner that did not entangle members of legislative bodies and legislative bodies in the discharge of the service delivery mandate however symbolic. Such funds ought to be integrated and subsumed within the structures of either the county executive or the National Executive.