Judgment of DK Musinga, (P).
1.This is an appeal which in its very nature delves into the functions and powers of the National Government vis-a-vis those of the County Governments under the Constitution of Kenya, 2010, the (‘ Constitution’) as relates to the issue of taxation as a means of raising revenue.
2.The 1st and 2nd respondents are limited liability companies involved in the trade and manufacture of forest produce. In their two separate constitutional petitions filed at the High Court in Eldoret and later transferred and consolidated before the High Court at Kabarnet, they raised various complaints regarding violations of their rights under the Constitution by the appellants.
3.The genesis of the dispute which is primarily between the 1st and 2nd appellants on the one part and the 1st and 2nd respondents on the other is a letter dated October 30, 2015 which was said to have been authored by the Director of Finance of the 1st appellant, informing the respondents as well as other manufacturers of forest produce of substantial increase of cess fees/levies in relation to forest products. The provisions relating to the new fees were contained in section 10 of the Second Schedule of the Baringo County Finance Act, 2015; a new legislation that had been enacted by the 2nd appellant. The 1st appellant vide a letter dated February 4, 2016 instructed the Baringo County Ecosystem Conservator to stop issuance of logging permits to the respondents.
4.The complaint by the respondents was, inter alia, that this arbitral increase of cess on forest produce from Kshs 60,000/= per month to Kshs 5,195,160/= per month was effected without consulting key stakeholders, who included the respondents.
5.The 1st and 2nd respondents also sought to challenge the constitutionality of Baringo County Finance Act, 2015 as relates to levy of cess on forest produce by the 1st appellant vis-à-vis the provisions of Article 62(3) of the Constitution which vests State forests to the National Government. The enactment of the Baringo County Finance Act, 2015 was also said to have offended the provisions of both Articles 209 (3)(c) and Article 210 (1) of the Constitution as there was no Act of Parliament in place authorizing the levying of cess of forest produce from State forests. Other provisions of the Constitution that the appellants were alleged to have contravened included Articles 10, 27, 28, 40, 46, 185(2) and 199.
6.The salient reliefs sought in the consolidated petitions included a declaration that the appellants’ actions were brazen, illegal, egregious, discriminative and in violation of the 1st and 2nd respondents’ constitutional rights; a declaration that the actions of the appellants had violated rights of the 1st and 2nd respondent under Article 1, 10, 27, 28, 40, 46, 48, 196, 199 and 209 of the Constitution as read together with sections 2, 4 and 20 of the Forests Act, 2005, section 132 of the Public Finance Management Act, 2012 and sections 116 to 121 of the County Government Act, 2012; a declaration that section 10 of the Second Schedule of the Baringo County Finance Act, 2015 violates the provisions of Articles 185(2) and 209 of the Constitution to the extent that it empowers the 1st appellant to levy cess in respect of State forests owned and managed by the 4th appellant within Baringo County; an order of permanent injunction to prohibit the 1st appellant from enforcing section 10 of the Second Schedule of the Baringo County Finance Act, 2015 to levy cess in respect of state forests within Baringo County; a declaration that the demand by the 1st appellant for payment of outstanding cess is illegal for being in violation of Article 62(3),185(2) and 209 of the Constitution; a declaration that by dint of Article 62(3),185(2) and 209 of the Constitution the 2nd appellant has no power to enact a law providing for the levying of cess in respect of forest produce from State forests within Baringo County; an order of certiorari to remove into the High Court for the purpose of quashing the decision by the appellants to levy additional cess amounting to double taxation; an order for compensation of the 1st and 2nd respondents for violation of their rights and freedoms under the Constitution, and an order for compensation for the illegal detention of their trucks loaded with forest produce and the consequential loss of user.
7.The appellants in their response to the consolidated petitions argued that under the provisions of Article 209(3) of the Constitution as read together with section 132 of the Public Finance Management Act, they are authorized to raise revenue by imposing taxes and they can make laws as necessary for that purpose such as the Baringo County Finance Act, 2015.
8.The appellants further argued that there was sufficient public participation of both the public and relevant stakeholders and that the amount chargeable was modest, reasonable and fair in the circumstances.
9.The learned trial judge vide judgment dated July 28, 2017 made several findings, parts whereof are reproduced as hereunder:
10.Accordingly, the learned trial judge issued various orders in favour of the 1st and 2nd respondents, including a declaration that the 2nd appellant has, by reason of Articles 62(3), 185(2) and 209 of the Constitution no authority to enact a law providing for the levying of cess in respect of forests produce from State forests within Baringo County; a declaration that section 10 of the Second Schedule of the Baringo County Finance Act, 2015 violates the provisions of Article 185(2) and 209 of the Constitution to the extent that it empowers the 1st appellant to levy cess in respect of State forests within Baringo County; a declaration that the proposed cess violates the principle of fair taxation under Article 201 (b) (i) of the Constitution; an order of a permanent injunction to restrain the 1st appellant from making any demand for cess or recovering any arrears on cess from the 1st and 2nd respondents; award of Kshs 3,000,000/= to each of the respondents as general damages to be paid by the 1st appellant for breach of the respondents constitutional rights.
11.Aggrieved and dissatisfied with entire decision of the trial court, the appellants appealed to this Court. Their Memorandum of Appeal dated May 24, 2018 contains 10 grounds of appeal. They fault the learned judge for, inter alia, failing to find that the appellants have the power to impose and enhance taxes previously levied by the defunct Baringo County Council; failing to find that forest cess was not being introduced by the impugned Act but was being enhanced; holding that the appellants lacked legal framework for imposing taxes on forest exploitation in the absence of national legislation; misinterpreting the provisions of Articles 209 and 210 of the Constitution; unreasonably depriving the appellants millions of revenues and depriving the local community all the benefits arising from exploitation of forests within Baringo County; awarding punitive and unreasonable damages to the 1st and 2nd respondents.
12.At the hearing of this appeal, Mr Kibii, learned counsel was present for the appellants while Mr Kibe, learned counsel appeared on behalf of the 1st and 2nd respondents. Mr Odongo, learned State counsel appeared on behalf of the Attorney General and the Kenya Forest Service, the 3rd and 4th respondents respectively.
13.Highlighting the written submissions of the 1st and 2nd appellants dated June 4, 2021, Mr Kibii submitted that under the provisions of Article 209(3) of the Constitution, the 1st appellant is authorized to raise revenue to finance its operations and services by levying and imposing property rates, entertainment taxes and any other taxes authorized by an Act of Parliament. Further, that Article 209(4) as read with section 21 of the County Government Act gives power to the 1st appellant to impose charges for services rendered. It was submitted that 1st respondent was authorized to charge cess for the purpose of maintenance of, inter alia, road infrastructure within the county which the respondents use in ferrying forest produce. The decision of this Court in Base Titanium Ltd v County Government of Mombasa and Another  eKLR was cited in support of the argument that the 1st appellant had constitutional authority to impose charges for services that they provide and that these include transport services.
15.As regards the question of public participation during the enactment of the impugned legislation, it was submitted prior to the passage of the impugned legislation, the 2nd appellant had invited the public and all relevant stakeholders to submit their views. For this reason, the 2nd appellant could not be said to have violated the provisions of Articles 10 and 118 of the Constitution.
16.Finally, on the issue of the general damages awarded to the 1st and 2nd respondents, it was submitted that the damages were inordinately high, excessive and punitive; and that the damages ought to have been compensatory and not punitive as held in Gitobu Imanyara and 2 Others v Attorney General  eKLR. See also Miti Breweries & Distillers Co Ltd v Attorney General and 2 others  eKLR.
17.On his part, Mr Odongo for the Attorney General and the Kenya Forest Service substantially supported the appellants’ submissions. He submitted that under the Fourth Schedule of the Constitution, County Governments are vested with powers to deal with conservation of forests. This power is reiterated under section 21 of the Forest Conservation and Management Act, 2015. It was submitted that in order to conserve forests, County Governments are required to enact legislation under Article 185(2) so as to give effect to the conservation function. According to Mr. Odongo, it is upon this basis that the appellants enacted the impugned legislation which was said to align properly with Article 209(4) of the Constitution. In sum, he submitted that the appellants were justified in enacting the impugned legislation.
18.Mr Kibe highlighted the 1st and 2nd respondent’s written submissions dated June 11, 2021. He submitted that the 1st and 2nd respondents were duly licensed by the Kenya Forest Service, (the 4th respondent), to harvest forest produce from State forests pursuant to the latter’s mandate under section 4 of the Forest Act, 2015. It was submitted that pursuant to the provisions of Article 62(3) of the Constitution and section 2 of the Forest Act, 2015, State forests are vested in the National Government and not County Governments and it is the 4th respondent who had the mandate to collect all revenue and charges due to the National Government in regard to forest resources, produce and services.
19.Counsel further submitted that the appellants lacked legal framework for imposing taxes on forest exploitation in the absence of an enabling Act of Parliament. Additionally, that contrary to the allegation that the levied cess was to be utilized by the 1st appellant to maintain roads on which the 1st and 2nd respondents transport the forest produce, the 1st appellant did not avail any evidence to show that it indeed maintains any of those roads as alleged.
20.Regarding the damages that were awarded for breach of the 1st and 2nd respondents’ constitutional rights, Mr Kibe submitted that the learned judge awarded Kshs 1,000,000/= for each breach of constitutional right, which is not excessive, considering that their two trucks and trailers were unlawfully detained for a considerably long period of time. He urged the Court not to disturb the award.
21.In sum, the 1st and 2nd respondents submitted that the learned judge made a sound interpretation of the provisions of Articles 209 and 210 of the Constitution and therefore there was no basis whatsoever for overturning the trial court’s decision.
22.The mandate of this Court in a first appeal is to re-appraise the evidence that was before the trial court as well as the judgment and arrive at its own independent decision. See Selle v Associated Motor Boat Company Limited  EA 123; Kenya Ports Authority v Kuston (K) Limited  2 EA 212.
23.In this appeal, there are three main issues that commend themselves to us for determination. The first issue relates to the constitutionality of the Baringo County Finance Act, 2015 and more specifically section 10 of the Second Schedule thereof. The second issue is the authority and/or power (if any) that is bestowed upon County Governments to levy cess on forest produce from forests within their areas of jurisdiction and which are owned by the State. The third one relates to the award of damages for violation of constitutional rights.
24.Article 186 of the Constitution as read together with the Fourth Schedule of the Constitution delineates the different functions and powers between the National and County Governments. Article 186(3) specifically provides that: 'a function or power not assigned by the Constitution or national legislation to a county is a function or power of the national government.' What this means therefore is that a County Government cannot either assign or arrogate to itself any functions or powers beyond those assigned to it under the Constitution or national legislation as enacted by Parliament from time to time.
25.The Constitution in the Fourth Schedule assigns the National Government the function of 'protection of the environment and natural resources with a view to establishing a durable and sustainable system of development' Under the same Schedule, the County Governments are assigned the function of implementation of specific national government policies on natural resources and environment conservation including soil and water conservation and forests.
26.What is in focus in this appeal is the constitutionality of the levy of cess on forest produce as provided for in the Baringo County Finance Act, 2015. ‘Cess’ is defined in the Black’s Law Dictionary, 9th Edition as: 'An assessment or a tax.' There can be no doubt therefore that cess is a form of tax.
27.Article 185 (2) of the Constitution vests County Governments with the powers to make legislation to impose taxes and licensing fees. It provides that: -
28.The authority of the National and County Governments to impose tax and the attendant rules is found under, inter alia, Article 210(1) of the Constitution which provides that: -
30.The legislative authority of a county must, in our view, be read against the provisions of Article 209 regarding power to impose taxes and charges. Article 209(3) specifically gives County Governments power to impose various charges and taxes. The provision reads as follows:
31.Our interpretation of the provisions of Article 209 of the Constitution is that taxation is not the preserve of the National Government. The County Government may, too, impose taxes but within the confines of Article 209.
32.In the present case, as rightly held by the learned trial judge, the appellants did not demonstrate any Act of Parliament envisaged under Article 209(3)(c) of the Constitution that authorized the imposition of the cess levy on forest produce from State forests. This did not only go against the provisions of Article 209(3)(c) but also offended the provisions of Article 210(1) of the Constitution. In this regard, therefore, I am persuaded that in the absence of an Act of Parliament, the Baringo County Finance Act, 2015 is, to the extent that it attempts to introduce the levying of cess on forest produce, illegal and unconstitutional.
33.The above finding brings into focus the authority (if any) which the 1st and 2nd appellants have with regards to State owned forests. The Constitution under Article 62(1)(g) defines 'public land' to include 'government forests other than forests to which Article 63(2)(d)(i) applies, government game reserves water catchment areas, national parks, government animal sanctuaries, and specifically protected areas.'
34.The exception contemplated under Article 63(1)(d) is community land which is either lawfully held, managed or used by specific communities as community forests, grazing areas or shrines; ancestral lands and lands traditionally occupied by hunter-gatherer communities; or lawfully held as trust land by county governments. The exception does not apply to the forest in question.
35.Article 62(3) provides that public land classified under clause (1)(f) to (m) shall vest in and be held by the national government in trust for the people of Kenya and shall be administered on their behalf by the National Land Commission. This therefore means that the forests in question are government forests within the meaning of Article 62(1)(g) and are under the exclusive management and control of the National Government.
36.Under the Fourth Schedule of the Constitution, the protection of the environment and natural resources is a function assigned to the National Government. County Governments are assigned the specific function of implementation of specific National Government policies on natural resources and environmental conservation, including soil and water conservation, and forestry. I agree with the findings of the learned trial judge that this cannot be the basis for levying of cess on forest produce by the 1st and 2nd appellants. Indeed, the appellants and more so the 1st appellant did not demonstrate specific national government policies as to levying of cess on forest produce which they sought to implement. It follows, therefore, that was not a function either of the 1st or of the 2nd appellant. By invocation of the provisions of Article 186(3) of the Constitution, the only logical conclusion I can make in the circumstances is that the appellants arrogated unto themselves constitutional powers and functions that are a preserve of the National Government.
37.Having held as above, who then has the authority to manage State forests and collect revenues therefrom? I make reference to the relevant provisions of The Forest Act, 2005 which was the Act applicable when the Baringo County Finance Act, 2005 was being promulgated. Under section 4 of the said Act, the 4th respondent is bestowed with the mandate of formulating policies and guidelines regarding the management, conservation and utilization of all types of forests in the country. Under section 4(j), the 4th respondent has the mandate of collecting all revenue and charges due to the Government in regard to forest resources, produce and services. The Forest Act, 2005 was repealed by The Forest Conservation and Management Act, 2016 which under section 8(c) mandates the 4th respondent to receive and consider applications for licenses or permits in relation to forest resources.
38.It is clear to me that the 4th respondent was the entity bestowed with powers under the Forest Act, 2005 to collect revenue and charges on forest produce on behalf of the National Government. There is evidence that the 1st and 2nd respondents paid various revenue to the National Government through the 4th respondent as a result of which they were allowed to harvest forest produce from State forests. It follows, therefore, that that the levy on cess introduced by the appellants through the Baringo County Finance Act, 2015 subjected the said respondents to double taxation on the same produce. This, in my view, goes against the principle of fair taxation envisaged under Article 201 (b)(i) of the Constitution.
39.The 1st appellant has attempted to justify the levying of cess for purposes of maintaining the road infrastructure within the county which the 1st and 2nd respondents use for transportation of the forest produce. I disagree with that argument. The 1st and 2nd respondents are licensed companies within the country, meaning that they pay various forms of taxes such as VAT to the National Government. Additionally, when they fuel their various trucks, there is a fuel levy that is paid directly to the National Government for purposes of road maintenance. If I were to accept the argument by the 1st appellant, the question that arises is: If the levy is intended for road maintenance, why is it not levied on other motorists who use roads within Baringo County? There is simply no legal justification or authority for the levying of cess by the 1st appellant on the forest produce. In any case, I agree with the findings of the learned trial judge that the 1st appellant did not lead any evidence to show that it maintains any of the alleged roads. In the absence of evidence to the contrary, I agree with the views expressed by the 1st and 2nd respondents that the mandate of maintaining the alleged roads is bestowed on the Kenya Rural Roads Authority (KeRRA) pursuant to the provisions of the Kenya Roads Act, 2007.
40.Regarding the quantum of damages for breach of the 1st and 2nd respondents’ constitutional rights, the appellant’s counsel submitted that the learned judge erred in law in failing to exercise his discretion judiciously and thereby awarded inordinately high and punitive damages of Kshs 3,000,000/= to each of the two respondents.
41.In making that award, the learned judge stated at paragraph 92 of his judgment:
42.It is trite law that an appellate court will not disturb an award of general damages unless it is so inordinately high or low as to represent an entirely erroneous estimate of such damages. See Butt v Khan  KAR 1. It was not demonstrated that the learned judge exercised his discretion arbitrarily or injudiciously. Violation of a constitutional right should not be treated as a petty infraction of the law. Constitutional rights are protections and liberties that the supreme law of this country guarantees each person and must therefore be accorded the highest regard by all. It is evident that the trial court considered the amount of the damages it awarded as 'modest.' I am not persuaded that the award should be disturbed.
43.In the upshot, I am of the considered view that this appeal is bereft of merit. As Murgor, JA agrees, it is hereby dismissed with costs to the 1st and 2nd respondents.
44.This judgment has been delivered in accordance with rule 34(4) of the Court of Appeal Rules, 2022, Nambuye JA having ceased to hold office by virtue of retirement.