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|Case Number:||Petition 368 of 2014|
|Parties:||Speaker, Nakuru County Assembly, Speaker, Mombasa County Assembly, Speaker, Kilifi County Assembly, Speaker, Tana River County Assembly, Speaker, Lamu County Assembly, Speaker, Taita-Taveta County Assembly, Speaker, Garissa County Assembly, Speaker, Wajir County Assembly, Speaker, Mandera County Assembly, Speaker, Marsabit County Assembly, Speaker, Isiolo County Assembly, Speaker, Meru County Assembly, Speaker, Tharaka Nithi County Assembly, Speaker, Embu County Assembly, Speaker, Kitui County Assembly, Speaker, Machakos County Assembly, Speaker, Makueni County Assembly, Speaker, Nyandarua County Assembly, Speaker, Nyeri County Assembly, Speaker, Kirinyaga County Assembly, Speaker, Murang’a County Assembly, Speaker, Kiambu County Assembly, Speaker, Turkana County Assembly, Speaker, West Pokot County Assembly, Speaker, Samburu County Assembly, Speaker, Trans Nzoia County Assembly, Speaker, Uasin Gishu County Assembly, Speaker,Elgeyo Marakwet County Assembly, Speaker, Nandi County Assembly, Speaker, Baringo County Assembly, Speaker, Laikipia County Assembly, Speaker, Narok County Assembly, Speaker, Kericho County Assembly, Speaker, Kajiado County Assembly, Speaker, Bomet County Assembly, Speaker, Kakamega County Assembly, Speaker, Vihiga County Assembly, Speaker, Bungoma County Assembly, Speaker, Busia County Assembly, Speaker, Siaya County Assembly, Speaker, Kisumu County Assembly, Speaker, Homabay County Assembly, Speaker, Migori County Assembly, Speaker, Kisii County Assembly,Speaker, Nyamira County Assembly,Speaker & Nairobi County Assembly v Commission on Revenue Allocation, Controller of Budget, Attorney General & Council of Governors|
|Date Delivered:||20 Feb 2015|
|Court:||High Court at Nairobi (Milimani Law Courts)|
|Citation:||Speaker, Nakuru County Assembly & 46 others v Commission on Revenue Allocation & 3 others  eKLR|
|Advocates:||Mr. Nyamodi for 1st Respondent, Mr. Arwa for 2nd Respondent, Mr. Moimbo for 3rd Respondent, Mr. Wanyama for Interested party, Mr. Okoth for Petitioner,|
|Court Division:||Constitutional and Human Rights|
|Advocates:||Mr. Nyamodi for 1st Respondent, Mr. Arwa for 2nd Respondent, Mr. Moimbo for 3rd Respondent, Mr. Wanyama for Interested party, Mr. Okoth for Petitioner,|
The powers of the Commission on Revenue Allocation & the Controller of budget in revenue allocation, budgetary processes and budget implementation
Speaker, Nakuru County Assembly & 46 Others vs. commission on Revenue Allocation & 3 Others
Petition No. 368 of 2014
High Court of Kenya at Nairobi
February 20, 2015
Reported by Njeri Githang’a & Kipkemoi Sang
On July 23, 2014, the petitioners filed a petition challenging the legality of the circular Reference No. CRA/CGM/Vol.III/99 addressed to all County Governments, by the Commission on Revenue Allocation (1st respondent) recommending a ceiling on allocation for all county Assemblies and all County Executives in County budgets for the financial year 2014/2015. Thereafter, the Controller of budget (2nd Respondent) on diverse dates vide various circulars addressed to the County Governments demanded that the County Assemblies’ budget allocations comply with the aforesaid Circular failure to which the 2nd Respondent would not approve withdrawals from the County Revenue Fund or any other fund by County Governments.
It was the petitioner’s contention that the said Circular was void on two fronts. Firstly, that it was issued without authority and in breach of the legislative authority of County Assemblies under articles 185(1) and (2) of the Constitution. Secondly, that in issuing and acting on the said Circular, the 1stRespondent violated article 189 (1) of the Constitution as it failed to consult County Assemblies on a matter that fell within their mandate and would in effect affect them.
Constitutional Law-public finance-principles of public finance- the budgetary and related processes in County Governments- the powers of the Commission on Revenue Allocation & the Controller of budget in revenue allocation, budgetary processes and budget implementation-Constitution of Kenya 2010, articles 10,216,217,218, Public Finance Management Act, sections 104, 107; County Allocation of Revenue Act; Division of Revenue Act
Constitutional Law- public finance-budgetary making process-Commission on Revenue allocation-the role of the Commission in the budgetary making process-where the commission had issued a circular recommending a ceiling on allocation for all county Assemblies and all County Executives in County budgets for the financial year 2014/2015- whether the 1st Respondent had powers to issue the Circular and if so, whether the recommended ceilings were within the law- whether recommendations made by the Commission on Revenue Allocation were binding on all the organs to which they were made.
Statutes-Interpretation of Statutes- National Revenue Allocation Laws -Public Finance Management Act, sections 104, 107; County Allocation of Revenue Act; Division of Revenue Act
1. Article 218 (1)(a) of the Constitution of Kenya, 2010 directed that at least two months before the end of each financial year, Division of Revenue Bill should be introduced to parliament to facilitate division of revenue raised by the National Government among the two levels of Governments. The National Treasury prepared the 2014 Budget Policy Statement and presented it to Parliament and it was adopted by Parliament on March 20, 2014 in accordance with article 218(1)(a) of the Constitution.
2. Under article 216(1) and (2) of the Constitution the 1st Respondent was the body charged with the responsibility of making recommendations inter-alia to the Senate, the National Assembly, the National Executive, County Assemblies and County Executives on the basis upon which revenue would be shared equitably between the National and County Governments. It also recommended how the revenue allocated to the County Government level would be shared among the County Governments and also made recommendations on matters concerning the financing and financial management by the County Governments.
3. Taken in its ordinary English meaning, ‘recommendations’ do not have a binding effect on the person or body to whom they are made and are not the same as ‘directives’ or ‘directions’ which were binding on those to whom they were addressed. However, in the context of the Petition and in order to interpret ‘recommendations’, the Constitution had to be read as a whole in order to ascertain its aim and object so as to establish the aim of the drafters of the Constitution. Heed had to be paid to the language used and the context of the specific provision under consideration. Article 217(7) of the Constitution showed that the bonding nature of the resolution was quite different from a mere recommendation.
4. Articles 216, 217 and 218 of the Constitution as well as the Commission on Revenue Allocation Act, (Cap 5E) distilled a number of facts:
a. The principle function of the 1st respondent was to make recommendations to the senate, the National Assembly, the National Executive, County Assembly and County Executive
b. By the very nature of recommendations, they were persuasive but not binding on the person or body to which they were directed
c. Its principal functions in article 216(1) and (2) of the Constitution were to be supplemented by legislation and hence Section 10(1) of the Commission on Revenue Allocation Act.
d. The impugned Circular if looked at in the context of article 216(1) (2) and (5) of the Constitution and section 10(1) of the Commission on Revenue Allocation Act could not be said to be unlawful or unconstitutional as argued by the Petitioners because it was made well within the mandate of the 1st Respondent.
5. Whether the Petitioners acted on the circular was a non-issue because in fact it was not binding on them or Parliament. That issue was moot because once the recommendations made were found not to be binding, then it followed that any complaint by the Petitioners ought to be directed at the State Organs with the final say on the budgets i.e. Parliament.
6. The principles under section 107 of the Public Finance Management Act, Cap.142 as read together with section 12 were crucial in the management of funds allocated to County Governments and there was no reason in the circumstances to delve into them because there was no issue raised with regard to them. Without section 12 or section 107 being declared unlawful, there was no value of any case made out of a non-binding Circular while the law that came subsequent to it remained intact.
7. The 1st Respondent ought to perform its functions as provided for under the four corners of the Constitution and the law. Further, in meeting its objectives it was bound by article 10, 216(3) and 249 (1), of the Constitution and section 10(2) of the Commission on Revenue Allocation Act. Section 10(2) created no obligation although the information required could be useful to the 1st Respondent but it was a matter wholly of discretion on its part. The 1st Respondent was not bound by the Constitution and the Act to seek information and representations from the County Government before making its recommendations on budget ceilings though the principles in article 189 of the Constitution encourage consultation between the two levels of Government. The same principles would apply to relations between the levels of Government and Independent Commissions and Offices
8. In the entire budgetary process, the views of County Governments and Assemblies were important and ought to be considered and taken seriously in making the Budget Policy Statement which would be used in preparing the National Annual Budget but the court could not hold that it was a mandatory obligation on the part of the 1st Respondent. While it was a good practice to consult and in terms set out in article 189, failure to do so could not amount to a violation of any law or the Constitution itself. The point was that out of respect for each other’s roles and expertise, each organ should not off-handedly dismiss any suggestions or information obtained from the other but failure to do so could not attract the Court’s sanctions.
9. Under section 104(1)(a)(b) of the Public Finance Management Act, it was the responsibility of the County Treasury to prepare the Annual Budget for a County and co-ordinate the preparation of Estimates of Revenue and Expenditure of a County Government. The procedure for the budgetary process under section117 of the Public Finance Management Act therefore started with the preparation of a County Fiscal Strategy Paper which was then submitted for approval by the County Assembly by 28th February of each financial year.
10. In preparing the County Fiscal Strategy Paper, the County Treasury was obligated to specify the broad strategic priorities and policy goals that would guide the County Government in preparing its budget for the coming financial year. Thereafter, under section 118 of the Act, the County Treasury prepared a County Budget Review and Outlook Paper in respect of the County for each financial year and submitted the paper to the County Executive Committee by 30th September of that year. The County Executive Committee then was obligated to discuss that Outlook Paper and after approval it was laid before the County Assembly before it was published and publicized.
11. It was within the mandate of the Treasury, County Executive and County Assembly to prepare and approve budgets for a County. However, that process could not be read in isolation of other processes because it was within the mandate of the 1st Respondent to recommend to the Senate, the National Assembly, the County Assembly and the County Government on equitable sharing of revenue between the two levels of Government and as between County Governments. By so recommending, the 1st Respondent would in essence be performing its obligations under article 216 of the Constitution and even if the 1st Respondent had recommended budgetary ceilings in the County Budgets for 2014/2015 financial year, that action did not violate the Constitution. However it had to do so in the framework and in accordance with the Constitution and the law.
12. The 1st respondent was an independent Constitution Commission and as such article 249(2) which provided for the objects of the commissions and the independent offices, were required to function free of subjection to “direction or control by person or authority”, but rather operate within the terms of the Constitution and the law. The independent clause did not accord them carte blanche to act or conduct themselves on whom; their independence was by design, configured to the execution of their mandate and performance of their functions as prescribed by the Constitution and the law.
13. Under section 117 of the Public Finance Management Act, the County Fiscal Paper ought to be prepared by 28th of February in each financial year, hence for Counties to comply with the Circular as issued by the 1st Respondent, they had to restart the budgetary process with the preparation and adoption of the Fiscal paper. However the issue was moot considering that the Allocation of Revenue Act, 2014 was in operation and it was the one that created the offending ceilings even if it was based on non-binding recommendations from the 1st Respondent.
14. Article 228(4) of the Constitution mandated the 2nd Respondent to oversee the implementation of the budgets of the National and County Governments by authorizing withdrawals from public funds under articles 204, 206 and 207 of the Constitution and under article 228(5), the Controller of Budget could not approve any withdrawal from a public fund unless that withdrawal was authorized by law.
15. Section 102 of the public Finance Management Act read together with Chapter twelve of the Constitution set out the principles that County Government must adhere to in respect of Public Finance.
16. Nowhere under the Public Finance Management Act provided for the 2nd Respondent to review budgets of County Governments before they were enacted. Fiscal reporting mechanisms were clear at the National level and so were they in the County level with the County Executive, County Treasury and County Assemblies each charged with the responsibility of ensuring accountability and transparency in utilization of County resources and specifically, the mandate of approving County Budgets was the responsibility of a County Assembly. The 2nd Respondent encroached on their mandate when it sought to get involved in their budgetary processes.
17. Article 228 was clear that the 2nd Respondent only oversaw the implementation of budgets. In that regard, the importance of the Appropriation Act was obvious and could not be understated. The argument that the 2nd Respondent would only authorize withdrawals from the County Revenue if the law and the budgetary process as envisaged by the Constitution and the Public Finance Management Act, 2012 was adhered to was a matter of interpretation of the Constitution and Statute based on a specific set of contested facts.
18. The Petitioners were not private individuals but officers serving in a public office as defined in article 260 of the Constitution. The Respondents were also officers and offices in the same public office and it was inconceivable how one could violate the other’s rights in the context of the Bill of rights. In the circumstances of the Petition any differences regarding the fiscal and budgetary processes between affected State Organs should not be such as to attract the Court’s intervention under the Bill of Rights. Those differences were to be settled in the manner envisaged by article 189(4) of the Constitution and not by litigation predicated on the Bill of Rights.
19. The dispute concerned the powers of the 1st and 2nd Respondent in revenue allocation, budgetary processes and budget implementation. Article 10 of the Constitution set out the principles of rule of law, transparency, accountability and good governance as some of the national values to guide such processes. Rule of law dictated that every state organ, independent offices and Commission had to apply the Constitution and the law in its affairs and it was the duty of the Court to determine the legality of their actions and that was how far the Court should go.
20. It was the duty of the 2nd Respondent to oversee the implementation of the budget in accordance with the law. It was also not bound to follow the respective County Budgets which were themselves subject to National Revenue Allocation Laws namely the Public Finance Management Act, the Division of Revenue Act and the County Allocation of Revenue Act.
21. (Obiter) “This case brings to the fore the need for prudence in the use of public funds and the need to follow the lawful processes set by the Constitution and relevant Statutes. It also makes urgent the need for a clear across-the-board understanding of Chapter 12 of the Constitution. Although one of the most important Chapters in the Constitution, seldom has it been subjected to an interrogation at the practical level. The result is that each of the Organs and institutions charged with its implementation invariably find relevance in areas reserved for others. The Chapter creates distinct roles for the National Executive, Parliament, County Executives and County Assemblies, Independent Commissions and offices and in this judgment; I have attempted to demarcate those roles. Should any of them for whatever reason become rogue, and should any wrangles arise, the law has created sufficient dispute resolution mechanisms to quickly address such situations including alternative dispute resolution mechanisms as is provided for in article 189(3) and (4) of the Constitution.”
22. “Lastly, it is time that County Executives and County Assemblies learnt that funds allocated to Counties are meant to serve legitimate and lawfully progressive purposes. It is distressing, as was said by one party to this Petition, to learn that Kenyans elected to serve in Counties may have been banned from travel for being a nuisance in certain foreign Countries. The funds used for such trips are said to be in their millions. Granted, no doubt devolution is working and indeed it must work but wastage will only drain an already drained populace”
1. County Government Meru v Ethics-and Anti-Corruption Commission Petition 177 of 2014 – (Explained)
2. Kenya Bus Service Ltd & another v Minister for Transport & 2 others Miscellaneous Civil Suit No 413 of 2005 – (Explained)
3. Kigula & others v Attorney General  AHRLR 197 (Ug CC 2005)
4. Okoiti , Okiya Omtatah & 3 others v Attorney General & 5 others Petition No 227 of 2013 – (Explained)
2. Re Matter of the Interim Independent Electoral Commission Constitutional Application No 2 of 2011 – (Followed)
1. Republic v MacFarlane  HCA 36 - (Mentioned)
2. Thomson v Canada (Deputy Minister of Agriculture) (1992) 1 SCR 385 – (Mentioned)
1. President of the Republic of South Africa & others v South African Rugby Football Union & others (CCT 16/98) 2000 (1) SA1- (Mentioned)
1. Constitution of Kenya, 2010 articles 1,2,3,6,10,19,20(1) (2); 22;23(1) (3); 25(4)(c) (5) (a) (7) (8) (9) ; 27(1) (4) (5); 27(4); 27; 43; 47 (1); 73(1) (a) (2) (b) (c); 156(1) (4) (b); 159; 160; 165; 174; 175; 176; 178 (1) (2) ; 179(1); 185 (1) (2); 186; 189(1) (3) (4); 190; 191(2) (b); 194; 201(b) (ii) ; 202(1); 203 (1); 204; 205; 206; 207(2) (3); 209; 210 ; 215; 216(2) (3) (a); 218 (1) (a) (b); (224; 225; 228 (4) (5); 248; 249(2); 259 ; 260 ; First Schedule – (Interpreted)
2 Constitution of Kenya (Protection of Rights and Fundamental Freedoms) Practice and Procedure Rules, 2013 (Constitution of Kenya, 2010 Sub Leg) rules 23, 24 – (Interpreted)
3. Commission on Revenue Allocation Act, 2011 (Act No 16 of 2011) section 10(c) - (Interpreted)
4. County Allocation of Revenue Act, 2014 section 12 – (Interpreted)
5. County Appropriation Act, 2014 (Act No 9 of 2014) – In general
6. Division of Revenue Act, 2014 (Act No 12 of 2014) section 3 – (Interpreted)
7. Interpretation and General Provisions Act (cap 2) of section 2 – (Interpreted)
8. Public Finance Management Act (cap412C) sections 102, 104(1) (a) (b); 107 (1); 109 (6); 117 (1) (2) (5) (6); 118; 125(5) (a); 126; 129; 131; 133; 134; 135 - (Interpreted)
1. Mr Nyamodi for 1st Respondent
2. Mr Arwa for 2nd Respondent
3. Mr Moimbo for 3rd Respondent
4. Mr Wanyama for Interested party
5. Mr Okoth for Petitioner
|History Advocates:||One party or some parties represented|
|Case Outcome:||Petition Dismissed|
|Disclaimer:||The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information|
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
CONSTITUTIONAL AND HUMAN RIGHTS DIVISION
PETITION NO. 368 OF 2014
IN THE MATTER OF AN APPLICATION BY THE SPEAKERS OF THE 47 COUNTY ASSEMBLIES OF THE REPUBLIC OF KENYA
IN THE MATTER OF ARTICLES 1,2,3,6,10,19,20,22,23(1) & (3), 27(1), 27(4), 27, 43, 47, 73, 159, 160, 165, 174, 175, 176, 179(1), 185, 186, 189, 190, 194, 201, 205, 207, 209, 210, 216, 224, 225, 228, 259 & 260 OF THE CONSTITUTION OF KENYA
IN THE MATTER OF RULES 23 AND 24 OF THE CONSTITUTION OF KENYA (PROTECTION OF RIGHTS AND FUNDAMENTAL FREEDOMS) PRACTICE AND PROCEDURE RULES, 2013
IN THE MATTER OF COUNTY GOVERNMENTS ACT NO.17 OF 2012
IN THE MATTER OF SECTIONS 117, 125,129, 131, 133 AND 134 OF THE PUBLIC FINANCE MANAGEMENT ACT, CAP 412C, LAWS OF KENYA
THE SPEAKER, NAKURU COUNTY ASSEMBLY…….....…………1ST PETITIONER
THE SPEAKER, MOMBASA COUNTY ASSEMBLY ……….….….2ND PETITIONER
THE SPEAKER, KWALE COUNTY ASSEMBLY …………...…….3RD PETITIONER
THE SPEAKER, KILIFI COUNTY ASSEMBLY ………….…...…….4TH PETITIONER
THE SPEAKER, TANA RIVER COUNTY ASSEMBLY ……..…….5TH PETITIONER
THE SPEAKER, LAMU COUNTY ASSEMBLY ………….....….….6TH PETITIONER
THE SPEAKER, TAITA-TAVETA COUNTY ASSEMBLY .......……...7TH PETITIONER
THE SPEAKER, GARISSA COUNTY ASSEMBLY ……….....….….8TH PETITIONER
THE SPEAKER, WAJIR COUNTY ASSEMBLY …………....….….9TH PETITIONER
THE SPEAKER, MANDERA COUNTY ASSEMBLY …….…...….10TH PETITIONER
THE SPEAKER, MARSABIT COUNTY ASSEMBLY ……….....….11TH PETITIONER
THE SPEAKER, ISIOLO COUNTY ASSEMBLY ……………...….12TH PETITIONER
THE SPEAKER, MERU COUNTY ASSEMBLY …………....….….13TH PETITIONER
THE SPEAKER, THARAKA NITHI COUNTY ASSEMBLY ........….14TH PETITIONER
THE SPEAKER, EMBU COUNTY ASSEMBLY …………….…..….15TH PETITIONER
THE SPEAKER, KITUI COUNTY ASSEMBLY ……………...….….16TH PETITIONER
THE SPEAKER, MACHAKOS COUNTY ASSEMBLY ………...….17TH PETITIONER
THE SPEAKER, MAKUENI COUNTY ASSEMBLY …………...….18TH PETITIONER
THE SPEAKER, NYANDARUA COUNTY ASSEMBLY ……......…19TH PETITIONER
THE SPEAKER, NYERI COUNTY ASSEMBLY ………….……….20TH PETITIONER
THE SPEAKER, KIRINYAGA COUNTY ASSEMBLY ………....….21ST PETITIONER
THE SPEAKER, MURANG’A COUNTY ASSEMBLY ………...….22ND PETITIONER
THE SPEAKER, KIAMBU COUNTY ASSEMBLY ……..…..…..….23RD PETITIONER
THE SPEAKER, TURKANA COUNTY ASSEMBLY …….…..….….24TH PETITIONER
THE SPEAKER, WEST POKOT COUNTY ASSEMBLY …....…….25TH PETITIONER
THE SPEAKER, SAMBURU COUNTY ASSEMBLY ………..….….26TH PETITIONER
THE SPEAKER, TRANS NZOIA COUNTY ASSEMBLY …….....….27TH PETITIONER
THE SPEAKER, UASIN GISHU COUNTY ASSEMBLY ……......….28TH PETITIONER
THE SPEAKER,ELGEYO MARAKWET COUNTY ASSEMBLY.......29TH PETITIONER
THE SPEAKER, NANDI COUNTY ASSEMBLY ………………..….30TH PETITIONER
THE SPEAKER, BARINGO COUNTY ASSEMBLY ………..…...….31ST PETITIONER
THE SPEAKER, LAIKIPIA COUNTY ASSEMBLY ……….…....….32ND PETITIONER
THE SPEAKER, NAROK COUNTY ASSEMBLY ………………….33RD PETITIONER
THE SPEAKER, KERICHO COUNTY ASSEMBLY ………….….....34TH PETITIONER
THE SPEAKER, KAJIADO COUNTY ASSEMBLY …………....…...35TH PETITIONER
THE SPEAKER, BOMET COUNTY ASSEMBLY ……….…...….….36TH PETITIONER
THE SPEAKER, KAKAMEGA COUNTY ASSEMBLY ……......……37TH PETITIONER
THE SPEAKER, VIHIGA COUNTY ASSEMBLY …………......….…38TH PETITIONER
THE SPEAKER, BUNGOMA COUNTY ASSEMBLY ………....…….39TH PETITIONER
THE SPEAKER, BUSIA COUNTY ASSEMBLY ……………..…..….40TH PETITIONER
THE SPEAKER, SIAYA COUNTY ASSEMBLY ……………..…...….41ST PETITIONER
THE SPEAKER, KISUMU COUNTY ASSEMBLY …………...….….42ND PETITIONER
THE SPEAKER, HOMABAY COUNTY ASSEMBLY ………........….43RD PETITIONER
THE SPEAKER, MIGORI COUNTY ASSEMBLY ………….....….….44TH PETITIONER
THE SPEAKER, KISII COUNTY ASSEMBLY ………………....…….45TH PETITIONER
THE SPEAKER, NYAMIRA COUNTY ASSEMBLY ……….…........….46TH PETITIONER
THE SPEAKER, NAIROBI COUNTY ASSEMBLY …………..........….47TH PETITIONER
COMMISSION ON REVENUE ALLOCATION………………...…..….1ST RESPONDENT
CONTROLLER OF BUDGET……………………………....…….……2ND RESPONDENT
THE ATTORNEY GENERAL………………………….......……….…..3RD RESPONDENT
COUNCIL OF GOVERNORS………………………….......…….….INTERESTED PARTY
“(a) A declaration that the Circulars that the 1st and 2nd Respondents, jointly and severally, and either by themselves, assigns or any person claiming through them, issued to any County Government in the Republic of Kenya on various dates between the 22nd day of April, 2014 to the 16th day of July 2014, or any other date, to prescribe and or put mandatory ceilings to financial allocation to any County Assembly in a County Budget for the Financial year 2014/2015 breached the Petitioners’ constitutional rights under Articles 27(1), 27(4), 27(5), 43 and 47(1) of the Constitution of Kenya, and were null and void for all intents and purposes.
(b) Judicial Review order of Certiorari to remove into this Honourable Court and quash the Circulars that the 1st and 2nd Respondents, jointly and severally, and either by themselves, assigns or any person claiming through them, issued to any County Government in the Republic of Kenya on various dates between the 22nd day of April, 2014 to the 16th day of July 2014, or any other date, to prescribe and or put mandatory ceilings to financial allocations to any County Assembly in a County Budget for the Financial Year 2014/2015.
(c) Judicial Review orders of Mandamus to remove into this Honourable Court and compel the 2nd Respondent to oversee the implementation of the budgets of County Governments in Kenya for the financial year 2014/2015 in terms of Article 228(4) of the Constitution of Kenya once County Governments pass their respective budgets for the Financial Year 2014/2015.
(d) Judicial Review orders of Mandamus to remove into this Honourable Court and compel the Respondents, jointly and severally, and either by themselves, assigns or any person claiming through them, to approve and disburse Funds as provided for in every County Government’s budgetary allocations as set out in the County’s Budgets estimates of Revenue and Expenditure for the Financial year 2014/2015, County’s appropriation Acts for the Financial year 2014/2015 and or County’s Finance Acts for the Financial year 2014/2015.
(e) Costs of and incidental to this Petition and;
(f) Any other order that this Honourable Court deems fit and just to grant in the circumstances.”
The Petitioners’ case
The 1st Respondent’s case
The 2nd Respondent’s case
The 3rd Respondent’s case
The Interested Party’s Case
Whether the impugned circulars were issued in breach of the law and the legislative authority of County Assemblies
“The object and purpose of this Act is to provide for the equitable division of revenue raised nationally between the national and county levels of government for the financial year 2014/2015 in accordance with Article 203(2) of the Constitution”.
Further and in the above context, Article 218(1)(b) provides for the enactment of the County Allocation of Revenue Act which provides for the equitable allocation of revenue raised by the National Government among the 47 Counties. In that regard, the County Allocation of Revenue Act, 2014 in Section 3 states it objects as follows;
“(a) provide, pursuant to Article 218(1)(b) of the Constitution, for the allocation of the equitable share of revenue raised by the National Government among the County Governments in accordance with the resolution approved by Parliament under Article 217 of the Constitution for the financial year 2014/2015;
(b) provide, pursuant to Articles 187(2) and 201(2) of the Constitution, for conditional additional allocations for the financial year 2014/2015; and
(c) facilitate the transfer of allocations made to the County Governments under this Act from the Consolidated Fund to the respective County Revenue Funds.”
“COMMISSION ON REVENUE ALLOCATION
Our Ref: CRA/CGM/VOL.III/99 22nd April, 2014
RE: RECOMMENDED BUDGET CEILINGS FOR COUNTY ASSEMBLY AND COUNTY EXECUTIVE BASED ON RECOMMENDED BUDGET ON COSTS OF NEW COUNTY STRUCTURES OF KSHS.30,232 MILLION
Attached please find CRA recommended ceilings for County Assembly and County Executive with accompanying notes.
Please note that where budget exceeds the recommended ceilings, it would be at the expense of the costed devolved services which will consequently affect service delivery.
cc - Controller of Budget
Three facts can be clearly discerned from a plain reading of the Circular. Firstly, it was issued by the 1st Respondent. Secondly, it was directed at Governors and County Executive Committee members in all the 47 Counties and lastly, it recommended budget ceilings for County Assemblies and County Executives and in that regard a question arises whether the 1st Respondent had powers to issue the Circular and lastly, if so, whether the recommended ceilings were within the law.
“(1) The principal function of the Commission on Revenue Allocation is to make recommendations concerning the basis for the equitable sharing of revenue raised by the National Government-
(a) between the National and County Governments’ and
(b) among the County Governments’.
(2) The Commission shall also make recommendations on other matters concerning the financing of, and financial management by, County Governments’ as required by this Constitution and National legislation.” (Emphasis added)
In addition to the above provisions, Section 10(1)of the Commission on Revenue Allocation Act,Cap.5Eprovides as follows;
“(1) In addition to its principal function under Article 216(1) of the Constitution, the commission shall, in accordance with clause (2) of that Article –
(a) Make recommendations for consideration by Parliament prior to any Bill appropriating money out of the Equalization fund is passed in parliament.
(b) Upon request from the Senate, make recommendations on the basis for allocating among the counties the share of National revenue that is annually allocated to the County levels of Government.
(c) Submit recommendations to the Senate, National Assembly, National Executive, County Assembly and County executive on the proposals made for equitable distribution of revenue between the National and County Governments and amongst the County Governments taking into account the criteria set out in Article 203 of the Constitution, including recommendations on the amounts earmarked for specific purposes such as the constituency development fund, among others; and
(d) Perform such other functions as are provided for by the Constitution or any other written law.” (Emphasis added)
“(i) put forward with approval as being suitable for a purpose or role
(ii) Advise as a course of action”.
Taken in its ordinary English meaning, it would therefore mean that ‘recommendations’ do not have a binding effect on the person or body to whom they are made. Recommendation are not the same as ‘directives’ or ‘directions’ which are certainly binding on those to whom they are addressed, - See Re Thomson (supra). However, in the context of the Petition before me and in order to interprete ‘recommendations’, the Constitution must be read as a whole in order to ascertain its aim and object so as to establish the aim of the drafters of the Constitution - See Kigula and Others vs The Attorney General (2005) AHGRLR 197 (Ug CC 2005).Heed must therefore be paid to the language used and the context of the specific provision under consideration.
“(1) Once every five years, the Senate shall, by resolution, determine the basis for allocating among the Counties the share of National revenue that is annually allocated to the County level of Government.
(2) In determining the basis of revenue sharing under clause (1), the Senate shall—
(a) take the criteria in Article 203 (1) into account;
(b) request and consider recommendations from the Commission on Revenue Allocation;
(c) consult the County Governors, the Cabinet Secretary responsible for finance and any organisation of County Governments; and
(d) invite the public, including professional bodies, to make submissions to it on the matter.
(3) Within ten days after the Senate adopts a resolution under clause (1), the Speaker of the Senate shall refer the resolution to the Speaker of the National Assembly.
(4) Within sixty days after the Senate’s resolution is referred under clause (3), the National Assembly may consider the resolution, and vote to approve it, with or without amendments, or to reject it.
(5) If the National Assembly––
(a) does not vote on the resolution within sixty days, the resolution shall be regarded as having been approved by the National Assembly without amendment; or
(b) votes on the resolution, the resolution shall have been––
(i) amended only if at least two-thirds of the members of the Assembly vote in support of an amendment;
(ii) rejected only if at least two-thirds of the members of the Assembly vote against it, irrespective whether it has first been amended by the Assembly; or
(iii) approved, in any other case.
(6) If the National Assembly approves an amended version of the resolution, or rejects the resolution, the Senate, at its option, may either––
(a) adopt a new resolution under clause (1), in which case the provisions of this clause and clause (4) and (5) apply afresh; or
(b) request that the matter be referred to a joint committee of the two Houses of Parliament for mediation under Article113, applied with the necessary modifications.
(7) A resolution under this Article that is approved under clause (5)shall be binding until a subsequent resolution has been approved.
(8) Despite clause (1), the Senate may, by resolution supported by at least two-thirds of its members, amend a resolution at any time after it has been approved.
(9) Clauses (2) to (8), with the necessary modifications, apply to a resolution under clause (8).” (Emphasis added)
(2) Each Bill required by clause (1) shall be accompanied by a memorandum setting out––
(a) an explanation of revenue allocation as proposed by the Bill;
(b) an evaluation of the Bill in relation to the criteria mentioned in Article 203 (1); and
(c) a summary of any significant deviation from the Commission on Revenue Allocation’s recommendations, with an explanation for each such deviation.” (Emphasis added)
The import of the above provisions is that a recommendation made by the 1st Respondent to the Senate in not binding but for good order, reasons for a deviation must be given.
216 “(1) …
(5) The Commission shall submit its recommendations to the Senate, the National Assembly, the National Executive, County Assemblies and County Executives.”
Reading Articles 216, 217 and 218 of the Constitution as well as Section 10(1) of the Commission on Revenue Allocation Act, Cap.5E, a number of facts can be distilled a viz;
(i) The principle function of the 1st Respondent is to make recommendations to the Senate, the National Assembly, the National Executive, County Assemblies and County Executives.
(ii) By the very nature of recommendations, they are persuasive but not binding on the person or body to which they are directed.
(iii) Its principal functions in Article 216(1) and (2)of the Constitution are to be supplemented by legislation and hence Section 10(1) of the Commission on Revenue Allocation Act, which has been reproduced elsewhere above.
(iv) The impugned Circular if looked at in the context of Article 216(1) (2) and (5) of the Constitution and Section 10(1) aforesaid cannot be said to be unlawful or unconstitutional as argued by the Petitioners because it was made well within the mandate of the 1st Respondent.
But that is not the end of the matter because it has been argued that the Circular has breached the legislative authority of the County Assemblies. How has that been done? The Petitioners have stated that the Circular had the effect of invalidating their County Fiscal Strategy Papers, County Budget Estimates of Revenue and Expenditure, Appropriation Bills and Finance Acts but I am at pains to understand that argument because while the circular was issued on 22ndApril 2014, the law providing for budgetary ceilings, being Section 12 of the County Allocation of Revenue Act, 2014 came into force on 5th September 2014 while this Petition was filed on 23rd July 2014.
Section 12 aforesaid provides as follows;
“Section 107 of the Public Finance Management Act is amended by inserting the following new Subsection immediately after subsection (2) –
(2A) pursuant to Articles 201 and 216 of the Constitution and notwithstanding Subsection (2), the Commission on Revenue Allocation shall recommend to the Senate the budgetary ceilings on the recurrent expenditures of each County Government.” (Emphasis mine)
Prof. Ojienda in the above context, submitted that neither the Division of Revenue Act, 2014nor the County Allocation of Revenue Act, 2014 contained block figures of revenue that goes to each County government as budgetary ceilings set by the 1stRespondent vide the impugned Circulars. I have again looked at the impugned Circular and the accompanying notes which provide for budget ceilings in block figures to each County. Where then is the dispute? Whether the Petitioners acted on the circular is a non-issue because in fact it was not binding on them or Parliament. That issue is moot because once I have found that the recommendations made are not binding, then it follows that any complaint by the Petitioners ought to be directed at the State Organs with the final say on the budgets i.e. Parliament. There is no argument before me that the County Allocation of Revenue Act, 2014 is unconstitutional or that Section 12 which introduced budgetary ceilings is unconstitutional. I have also not seen any argument that Section 107 of the Public Finance Management Act, Cap.142 is unconstitutional. That Section for avoidance of doubt proves as follows;
“(1) A County Treasury shall manage its public finances in accordance with the principles of fiscal responsibility set out in subsection (2) and shall not exceed the limits stated in the regulations.
(2) In managing the county Government’s public finances, the County Treasury shall enforce the following fiscal responsibility principles-
(a) the county Government’s recurrent expenditure shall not exceed the County Government’s total revenue;
(b) over the medium term a minimum of thirty percent of the County Government’s budget shall be allocated to the development expenditures;
(c) the County Government’s expenditure on wages and benefits for its public officers shall not exceed a percentage of the County Government’s total revenue as prescribed by the County Executive member for finance in regulations and approved by the County Assembly;
(d) over the medium term, the Government’s borrowings shall be used only for the purpose of financing development expenditure and not for recurrent expenditure;
(e) the County debt shall be maintained at a sustainable level as approved by County Assembly.
(f) the fiscal risks shall be managed prudently; and
(g) a reasonable degree of predictability with respect to the level of tax rates and tax bases shall be maintained, taking into account any tax reforms that may be made in the future.
(3) For the purposes of subsection (2) (d), short term borrowing shall be restricted to management of cash flows and shall not exceed five percent of the most recent audited County Government revenue.
(4) Every County Government shall ensure that its level of debt at any particular time does not exceed a percentage of its annual revenue specified in respect of each financial year by a resolution of the County Assembly.
(5) The regulations may add to the list of fiscal responsibility principles set out in subsection (2).”
Read together with Section 12 aforesaid, the above principles are crucial in the management of funds allocated to County Governments and I see no reason in the circumstances to delve into them in the circumstances of the Petition before me because there is no issue raised with regard to them.
Without Section 12 or Section 107 above being declared unlawful, I do not see the value of any case made out of a non-binding Circular while the law that came subsequent to it remains intact.
“While bearing in mind that the various commissions and independent offices are required to function free of subjection to “direction or control by any person or authority”, we hold that this expression is to be accorded its ordinary and natural meaning; and it means that the Commissions and independent offices, in carrying out their functions, are not to take orders or instructions from organs or persons outside their ambit. These Commissions or independent offices must, however, operate within the terms of the Constitution and the law; the “independence clause” does not accord them carte blanche to act or conduct themselves on whim; their independence is, by design, configured to the execution of their mandate, and performance of their functions as prescribed in the Constitution and the law.”
The Court went further to state that;
For due operation in the matrix, “independence” does not mean “detachment”, “isolation” or “disengagement” from other players in public governance. Indeed, for practical purposes, an independent commission will often find it necessary to co-ordinate and harmonise its activities with those of other institutions of Government, or other Commission will often find it necessary to co-ordinate and harmonize its activities with those of other institutions of Government, or other commissions, so as to maximize results, in the public interest. Constant consultation and co-ordination with other organs of Government, and with civil society as may be necessary, will ensure a seamless, and an efficient and effective rendering of service to the people in whose name the Constitution has instituted the safeguards in question.
It then concluded as follows;
The moral of this recognition is that commissions and independent offices are not to plead “independence” as an end in itself; for pubic-governance tasks are apt to be severely strained by possible “clashes of independences.”
“(1) The objects of the commissions and the independent offices are to—
(a) protect the sovereignty of the people;
(b) secure the observance by all State organs of democratic values and principles; and
(c) promote constitutionalism”.
Some of the democratic values and principles which also bind the 1st Respondent are those stated at Article 10 of the Constitution are as follows;
(2) The National values and principles of governance include––
(a) patriotism, national unity, sharing and devolution of power ,the rule of law, democracy and participation of the people;
(b) human dignity, equity, social justice, inclusiveness, equality, human rights, non-discrimination and protection of the marginalised;
(c) good governance, integrity, transparency and accountability; and State and religion. National symbols and national days. National values and principles of governance.
(d) sustainable development.”
“(3) In formulating recommendations, the Commission shall seek––
(b) to promote and give effect to the criteria mentioned in Article 203 (1);
(c) when appropriate, to define and enhance the revenue sources of the national and county governments; and
(c) to encourage fiscal responsibility.”
“In making recommendations under this Section, the Commission shall take into consideration such facts or information as may be given to it by a County Government”.
“(1) Government at either level shall—
(a) perform its functions, and exercise its powers, in a manner that respects the functional and institutional integrity of government at the other level, and respects the constitutional status and institutions of government at the other level and, in the case of county government, within the county level;
(b) assist, support and consult and, as appropriate, implement the legislation of the other level of government; and
(c) liaise with government at the other level for the purpose of exchanging information, coordinating policies and administration and enhancing capacity.
(2) Government at each level, and different governments at the county level, shall co-operate in the performance of functions and exercise of powers and, for that purpose, may set up joint committees and joint authorities.
(3) In any dispute between governments, the governments shall make every reasonable effort to settle the dispute, including by mean of procedures provided under national legislation.
(4) National legislation shall provide procedures for settling intergovernmental disputes by alternative dispute resolution mechanisms, including negotiation, mediation and arbitration.”
(5) In preparing the Budget Policy Statement, the National Treasury shall seek and take into account the views of –
(a) the Commission on Revenue Allocation;
(b) County Governments;
(c) Controller of Budget;
(d) The Parliamentary Service Commission;
(e) The judicial Service Commission;
(f) The public; and
(g) Any other interested persons or groups;”
(a) Integrated development planning process which shall include both long term and medium term planning;
(b) Planning and establishing financial and economic priorities for the County over the medium term;
(c) Making an overall estimation of the County Government’s revenues and expenditures;
(d) Adoption of County Fiscal Strategy Paper;
(e) Preparing budget estimates for the County Government and submitting estimates to the County Assembly;
(f) Approving of the estimates by the County Assembly;
(g) Enacting an appropriation law and any other laws required to implement the County Government’s budget;
(h) Implementing the County Government’s budget; and
(i) Accounting for, and evaluating, the County Government’s budget revenues and expenditures.
(2) The County Executive Committee member for Finance shall ensure that there is public participation in the budget process.”
(i) A County Fiscal Strategy Paper, which, pursuant to the provisions of Sections 117(1) and (6) of the Public finance Management Act must be submitted to a County Assembly by the County Treasury by 28th February each year, and adopted by the County Assembly by 14th March each year. It is the County Fiscal Strategy Paper that presents the financial outlook of a County with respect to County Government revenues, expenditures and borrowing for the coming financial year and over the medium term;
(ii) A County Budget Estimates of Revenue and Expenditure, which, pursuant to the provisions of Sections 125(2) (a), 129(6) and 131(1) of the Public Finance Management Act, must be presented to a County Assembly by the County Executive Committee Member for Finance by 30th April each year and approved by the County Assembly promptly and in any event before 30th June each year;
(iii) A County Appropriations Act which the County Assembly must consider and enact by 30th June each year; and
(iv) A County Finance Act, which pursuant to the provisions of Section 133 of the Public Finance Management Act, a County Assembly must consider and enact by 30th September each year.
“(1) Each County Government shall ensure adherence to—
(a) the principles of public finance set out in Chapter Twelve of the
(b) the fiscal responsibility principles provided in section 107 under this Act;
(c) national values set out in the Constitution; and
(d) any other requirements of this Act.
(2) The County Executive Committee shall observe principles of collective responsibility in exercising their functions under this Act.
(3) In making decisions a county assembly shall take cognisance of Article 216(2) of the Constitution.”
In addition, Section 131(1) of the Public Finance Management Act provides that;
“the County Assembly shall consider the county government budget estimates with a view to approving them, with or without amendments, in time for the relevant appropriation law and any other laws required to implement the budget to be passed by the 30th June in each year.”
(3) Subject to clause (5), the High Court shall have—
(b) jurisdiction to determine the question whether a right or fundamental freedom in the Bill of Rights has been denied, violated, infringed or threatened;
(d) jurisdiction to hear any question respecting the interpretation of this Constitution including the determination of—
(i) the question whether any law is inconsistent with or in contravention of this Constitution;
(ii) the question whether anything said to be done under the authority of this Constitution or of any law is inconsistent with, or in contravention of, this Constitution;
The dispute before me does not concern itself with the legality or otherwise of the Counties Appropriation Acts but it regards the mandate of the 1st and 2nd Respondent in the budgetary process and in overseeing the implementation of County budgets. The allegation that Counties had not submitted copies of County developments plans, debt management strategies as required by the law was not proved and given my findings as above, that issue is moot. That being the case, this Court cannot enter into such a vague dispute. It would only intervene had it been shown that the Appropriation Acts as enacted by the Counties violated the existing national legislation or that the Petitioners acted in contravention of the law, which is not the case before me.
Whether the fundamental rights and freedoms of the Petitioners were violated
“Every person shall enjoy the rights and fundamental freedoms in the Bill of Rights to the greatest extent consistent with the nature of the right or fundamental freedoms’.
Under Article 260 of the Constitutiona ‘person’ includes “a company, association or other body of persons whether incorporated or unincorporated’.
The issue therefore is whether County Assemblies are persons capable of having their fundamental rights protected and enforced. In answering that question, Majanja J in County Government of Meru vs Ethics and Anti-Corruption Commission (supra) stated as follows;
“A County Government is recognized as part of the State organs that exercise the sovereign power of the people under Articles 1(4), 6 and 176 of the Constitution. Under Article 260 of the Constitution. “State”, when used as a noun, means the collectivity of offices, organs and other entities comprising the Government of the Republic under this Constitution” while the term person, “includes a company, association or other body of persons whether incorporated or unincorporated.” Under Article 21 of the Constitution, the obligations, regarding the implementation of fundamental rights and freedoms are cast on the on the State and every State organ. Article 22 of the Constitution, which has been invoked by the Petitioner, grants every “persons” the right to Institute Court proceedings claiming that a right or fundamental freedom in the bill of Rights has been denied, violated or infringes or is threatened.”
The learned judge continued thus;
“The provisions I have cited above show that there is a clear distinction between a person and a County Government which is a State organ vis-à-vis the rights and obligations under the Bill of Rights. I am doubtful, that the County Government qua County government can lodge a claim under Article 22 of the Constitution against another State organ to enforce fundamental rights and freedoms as the County Governments is not a person for purposes of the Constitution ad more particularly the Bill of Rights. I therefore find and hold that the Petitioner cannot agitate a claim for violation of fundamental rights and freedoms against the Commission. I therefore decline to grant prayer (b) of the Amended Petition.”
Whether the orders sought can be granted
DATED, DELIVERED AND SIGNED AT NAIROBI THIS 20TH DAY OF FEBRUARY, 2015
In the presence of:
Kariuki – Court clerk
Mr. Nyamodi for 1st Respondent
Mr. Arwa for 2nd Respondent
Mr. Moimbo for 3rd Respondent
Mr. Wanyama for Interested party
Mr. Okoth for Petitioner
Judgment duly read.