Weekly Newsletter 001/2017

Weekly Newsletter 001/2017



Kenya Law

Weekly Newsletter


An agreement between an advocate and client for remuneration that is conditional on success or failure of case is unenforceable.D. Njogu & Co Advocates v National Bank of Kenya Limited
Court of Appeal at Nairobi
Civil Appeal No 165 of 2007
A Visram, HM Okwengu & F Sichale JJ A
November 25, 2016
Reported by Emma K. Mwobobia

Download the Decision

Advocates – advocate client relationship - agreement between an advocate and client for remuneration that is conditional on success or failure of case is enforceable - agreement between an advocate and client for remuneration that is conditional on success or failure of case is enforceable - whether a party who knowingly enters into an agreement whose terms are contrary to a written law can prosecute to avoid the illegal agreement – Advocates Act section 45(1) 46(c)(d); Advocates (Remuneration) Order under Rule 11(2).
Contract law – agreements – advocate-client agreements – validity of an agreement that was payable upon a conditional clause – agreement based on the success of the litigation and full recovery of the amount owed – legality of the conditional clause – whether the agreement was enforceable in the circumstances – Advocates Act section 46 (c) &(d). 

Brief Facts:
The Respondent in the suit had been sued by one of its customers M/S Shimmers Plaza Limited who were seeking various orders against the Respondent. The appellant filed an application to withdraw from acting for the Respondent which application was allowed by the Court. Thereafter the Appellant sent a fee note to the Respondent for and followed that up by filing a Bill of Costs. The Respondent raised a preliminary objection to the Bill of Costs contending that the parties had agreed on the amount of fees payable and therefore, there was nothing left for taxation.
The Taxing Master upheld the Preliminary Objection and struck out the Bill of Costs, holding that a valid and enforceable agreement on the advocate clients’ costs existed between the parties. Being aggrieved by the Ruling of the Taxing Master, the Appellant filed a reference in the High Court under Rule 11(2) of the Advocates (Remuneration) Order. The High Court upheld the Ruling of the Taxing Master and dismissed the reference.
The Appellant was not satisfied with the ruling of the High Court and therefore lodged an appeal.

Issues:
  1. Whether an agreement between an advocate and client for remuneration that was conditional on success or failure of case was enforceable.
  2. Whether a party who knowingly entered into an agreement whose terms were contrary to a written law could maintain a suit whose purport was an attempt to avoid the illegal agreement. Read More...

Relevant provision of the Law
Advocates Act
Section 45 (1):-
 “Subject to Section 46 and whether or not an order is in force under Section 44, an advocate and his client may-
 a. Before, after or in the course of any contentious business, make an agreement fixing the amount of the advocate’s remuneration in respect thereof;
 b. Before or after or in the course of any contentious business in a civil court make an agreement fixing the amount of the advocate’s instruction fees in respect thereof or his fees for appearing in court or both;
 c. before, after or in the course of any proceedings in a criminal court or a court martial, make an agreement fixing the amount of the advocate’s fee for the conduct thereof,  and such agreement shall be valid and binding on the parties provided it is in writing and signed by the client or his agent duly authorized in that behalf.”

46(c) and (d) provides that:-
 “Nothing in this Act shall give validity to—

 c. any agreement by which an advocate retained or employed to prosecute or defend any suit or other contentious proceeding stipulates for payment only in the event of success in such suit or proceeding or that the advocate shall be remunerated at different rates according to the success or failure thereof; or
 d. any agreement by which an advocate agrees to accept, in respect of professional business, any fee or other consideration which shall be less than the remuneration prescribed by any order under section 44 respect of that business or more than twenty-five per centum of the general damages recovered less the party and party costs as taxed or agreed;”

Held:

  1. It is the Court’s mandate to re-appraise the evidence and to draw inferences of fact. Where the judgment subject of the appeal involves exercise of discretion, the Court in considering the appeal should not interfere unless it is satisfied that the Judge misdirected himself in some matter and as a result arrived at a wrong decision, or that it is manifest from the case as a whole that the Judge was clearly wrong in the exercise of discretion and occasioned injustice by such wrong exercise.
  2. The only way that the balance could have been recovered from the bank’s customer was if the suit against the bank’s customer succeeded. That meant that recovery of a substantial part of the fees was based on the success of the undertaking.
  3. Recovery of the advocate client fees was partly based on the success of the litigation and also on full recovery of the amount owed. Needless to state that the conditions provided in the letter that appointed and retained the appellant clearly contravened section 46(c) & (d) of the Advocates Act that prohibited payment of advocates fees being conditional on the success of the suit.
  4. Since the Appellant and the Respondent had clearly agreed on the provision of section 46(c) & (d) of the Advocates Act that prohibited payment of advocates fees being conditional on the success of the suit provisions, it was evident that they were both party to an agreement that was illegal as the terms of the agreement contravened the law.
  5. Any contract that contravened a statute is illegal and the same is void, ab initio and is therefore unenforceable. The contract between the Appellant and the Respondent regarding the payment of legal fees was unenforceable. However, the matter was not that simple. That was because the Appellant who initiated litigation in the matter by filing the advocate client’s bill of costs was a firm of advocates who had to be deemed to be well aware of the law.
  6. When an advocate made a champetous agreement with his client, the advocate was more guilty for he knew the contract stipulated terms contrary to the essence and existence of the Advocates Act. If he recovered and got work on the strength of an illegal contract which provided the fees payable, then he had regulated his fee note to that contract.
  7. A party could not sustain his cause of action by showing that he participated (sic) sanctioned an illegality which had the effect of giving undue advantage. In such circumstances, the Court would not come to his aid to wriggle out of that relationship. No Court would aid a party that brought its case on an illegal contract.
  8. The Appellant was a firm of advocates headed by an advocate of the High Court who as an officer of the court had to be deemed to be well aware of the provisions of the Advocates Act and the Advocates Remuneration Order. It was doubtful that the Appellant was aware of the illegality and the consequences of anchoring its relationship with the Respondent on such illegality. No doubt the “carrot” was the assurance of a retainer and assignment of legal work. Having succeeded in getting the work in accordance with the illegal agreement, the Appellant should not then turn round and seek the Court’s intervention in getting a different remuneration from what was offered and agreed.
  9. It was an abuse of the court process for the appellant to seek the Court’s intervention in basing its fees on the Advocates Remuneration Order whose provisions he had in the first instance deliberately ignored.
  10. An advocate, who willingly and knowingly entered into an agreement in regard to the payment of his fees that was contrary to the Advocates Remuneration Order, could not maintain proceedings whose purport was to avoid the illegal agreement by reverting to the Court to tax his advocate/client bill of costs in accordance with the Advocate’s Remuneration Order.
  11. Notwithstanding the illegality of the contract, the Court of Appeal could not come to the appellant’s aid as the appellant was estopped by his conduct from seeking the court’s intervention.

Appeal dismissed.

Kenya Law
Case Updates Issue 001/2017
Case Summaries

CONSTITUTIONAL LAW

Governor breached contract of employment between the County Secretary and Tharaka Nithi County Government by reshuffling the Executive Committee

Frederick Njeru Kamunde v Tharaka Nithi County Government & another
Employment & Labour Relations Court at Nyeri
Petition No 6 of 2015
September 23, 2016
B Ongaya J
Reported by Phoebe Ida Ayaya

Download the Decision

Constitutional Law – fundamental rights and freedoms - enforcement of fundamental Rights and freedoms- right to fair administrative action- limitation of the right to fair administrative action- whether the Petitioner was accorded any fair administrative action by the 2nd Respondent during the reshuffle as the Petitioner was not a member of the executive committee of the County Government and he was not a chief officer of the County Government –whether he was denied access to justice within the meaning of article 47 - Constitution of Kenya, 2010 article 47(1) & (2); Employment Act sections 41&43
Administrative Law- county governments -administrative powers -whether the 2nd respondent acted lawfully and within his administrative powers by carrying out a government reshuffle that affected the Petitioner in the manner it did-County Governments Act sections 30(2); 46
Employment Law-contracts-employment contracts-breach of employment contracts- whether the 2nd Respondent had authority to so reshuffle the executive committee as to contravene or breach the contract of employment entered into by the Petitioner with the 1st Respondent-remedies- Employment Act sections 41&43
Judicial Review – certiorari & injunction – application for orders of certiorari to quash the decision of the Tharaka Nithi county government in reshuffling the executive committee –-whether the decision to reshuffle the Petitioner by the 2nd Respondent were made in contravention of the rule of law and the rules of natural justice

Brief facts

Between March 2013 and August 2014 the Petitioner was seconded by the Transitional Authority from his service at the Ministry of Education to serve as the Interim County Secretary for Tharaka Nithi County. Prior to the secondment the Petitioner had served as a civil servant in the Ministry’s Directorate of Policy and Planning effective September 15, 2010.
Sometime in 2014 the 1st Respondent decided to recruit a substantive holder to the office of county secretary that the Petitioner had held on interim basis effective March 2013. Under section 44 of the County Governments Act, 2012 the county secretary was competitively recruited from candidates who were university graduates with at least 10 years’ experience in administration and management, was nominated by the Governor from amongst the candidates, approved by the County Assembly and appointed by the Governor. The Petitioner had been competitively appointed as the interim county secretary in interviews conducted by the Transitional Authority following the Petitioner’s application in February 2013. In August 2014 the 2nd Respondent nominated the Petitioner and the County Assembly of the 1st Respondent approved the nomination for appointment to the office of the county secretary. The letter appointing the Petitioner substantively to the office of county secretary was dated August 22, 2014

Issues:
  1. Whether the 2nd Respondent acted lawfully and within his administrative powers by carrying out a government reshuffle that affected the Petitioner in the manner it did.
  2. Whether the 2nd Respondent had authority to reshuffle the executive committee as to contravene or breach the contract of employment entered into by the Petitioner with the 1st Respondent.
  3. Whether the Petitioner was accorded any fair administrative action by the 2nd Respondent during the reshuffle, as he was not a member of the executive committee or a chief officer of the County Government
  4. Whether the decision to reshuffle the Petitioner by the 2nd Respondent were made in contravention of the rule of law and the rules of natural justice Read More...

Relevant Provisions of the Law
County Governments Act, 2012
Section 30(2) (e) provides that subject to the Constitution, the governor shall constitute the county executive committee portfolio structure to respond to the functions and competencies assigned to and transferred to each county.
Section 46 of the Act provides as follows:
46.1) The county executive committee shall determine the organization of the county and its various departments and for that purpose may—
(a) establish, continue or vary any department, and determine the objects and purposes of the department;
(b) determine the number and nature of departments at the decentralized units;
(c) abolish any department; and
(d) determine or change the name of any department.
(2) When establishing and organizing the county, the county executive committee shall take into account, and be guided by, the need to —
(a) be responsive to the needs of the local community and the functions and competencies assigned to and transferred to the county;
(b) facilitate a culture of public service and accountability in the county public service;
(c) be performance oriented and focused on the objects of devolved government set out in Article 174 of the Constitution;
(d) ensure that the county departments align their roles and responsibilities with the priorities and objectives set out in the county’s policies and plans;
(e) organise its departments and other structures in a flexible way in order to respond to changing priorities and circumstances;
(f) assign clear responsibilities for the management and coordination of departments and functions;(g) allow participatory decision making as far as is practicable; and
(h) provide an equitable, fair, open and non-discriminatory working environment.

Held

  1. Once the County Secretary had been appointed, the powers of the Governor over the County Secretary’s tenure were provided for in section 44(2) (c) of the County Governments Act, 2012, thus, 44 (2) (c) the County Secretary could, subject to the conditions and terms of appointment, be dismissed by the governor. There was no provision that the governor could bring the tenure of a county secretary to an end by way of reassignment. In section 45 (5) of the Act, the governor could re-assign a county chief officer.
  2. The governor’s power to reassign chief officers did not spread to the office of the County Secretary and even then, reassignment of the chief officers was limited to deployment of a chief officer to another portfolio of chief officer and not to a lower position say of a director as the 2nd Respondent purported to act against the Petitioner.
  3. The power and function to reorganize the departments of the county government was shared between the Governor and the County Executive Committee and in the instant case it was not shown that the committee discharged its roles as envisaged in section 46 of the Act prior to the reorganization so that the 2nd Respondent appeared to have acted unilaterally contrary to provisions of section 46 of the Act.
  4. The circular stated it was a reshuffle, meaning a reorganization of the departments of the County Government, but it had not been shown that the County Executive Committee had discharged its statutory functions as per the provisions of the law. Even if it was considered that circular fell short of reorganization of the departments of the County Government, the 2nd Respondent lacked authority to reshuffle the holder of the office of the County Secretary in the manner it was done for want of the relevant legislative or constitutional authority.
  5. The 2nd Respondent acted in clear breach of the Petitioner’s contract of service under which he was appointed to the specific office of County Secretary for a definite term. Thus the Petitioner as holder of the office of County Secretary was not amenable to cease holding that office by way of a reshuffle.
  6. The legislation by the County Assembly was subject to the Constitution and national legislation. The 2nd Respondent did not enjoy power or authority to reassign or deploy the Petitioner out of the office of the County Secretary as was done. The appointment to the office of the County Secretary was personal to the holder duly appointed to the office and the holder was to serve and could be dismissed only in accordance with the provisions of section 44(2) (c) of the Act.
  7. In reorganizing the County Government, there was to be compliance with the provisions of section 46 of the Act. The dismissal under section 44(2) (c) of the Act was to be consistent with due process as envisaged in articles 10, 47, 236 of the Constitution of Kenya, 2010 and other relevant provisions of law that prescribed fairness including section 41 of the Employment Act, 2007 on notice and hearing; and section 43 of the Employment Act, 2007 on genuine or valid reason for termination.
  8. The Petitioner was not a member of the executive committee of the County Government and he was not a chief officer of the County Government. Thus, his inclusion in the circular on reshuffling of chief officers and members of the executive committee of the county was clearly a misconception. The Petitioner’s terms of service included that he would serve for a term of 5 years per the letter of appointment and by the statutory provisions he could be dismissed from office by the Governor subject to the terms and conditions of service. Such terms and conditions of service included applicable constitutional, statutory, contractual and lawful policy provisions.
  9. The safeguards included article 47 of the Constitution, 2010 on fair administrative action and giving of reasons for any adverse decision. Article 236 of the Constitution, 2010 as well as sections 43 and 41 of the Employment Act, 2007 applied to the Petitioner’s employment. The reshuffle failed to consider that it amounted to termination of the Petitioner’s employment as the County Secretary and in contravention of the cited constitutional and statutory provisions that by law were incorporated or implied in the contract of employment as minimum terms and conditions of service.
  10. The Petitioner’s deployment as director in the department of education was not only a demotion but also lacked legal basis and undermined his continued appointment to the office of county secretary in a substantive capacity. The appointment of one Mr. Ahmed Hemed to the office of County Secretary in an acting capacity lacked legal basis because the substantive office holder, the Petitioner, had not lawfully relinquished or lawfully terminated his tenure of service in the office as there was no vacancy to justify the acting appointment.
  11. The 2nd Respondent had no authority to reshuffle the executive committee as to contravene or breach the contract of employment entered into by the Petitioner with the 1st Respondent.
  12. The Petitioner established that the deployment to director from the position of County Secretary contravened the Petitioner’s right to fair administrative action. The decision was unreasonable in so far as the Petitioner held the position of County Secretary personal to himself and he was not amenable to reshuffle or redeployment in the manner it was purportedly done by the 2nd Respondent.
  13. The decision was unreasonable as it amounted to unlawful and unjustified termination of the Petitioner’s service as the County Secretary contrary to the contractual tenure of 5 years. The deployment was an adverse decision as it amounted to some kind of constructive termination from the office of County Secretary, and it was a demotion. Such adverse decision would require the 2nd Respondent to give reasons as provided for in article 47 of the Constitution, 2010 but that was not done.
  14. Rule of law and human rights were some of the national values and principles of governance under article 10 of the Constitution, 2010 and the same were violated.
  15. As elaborate submissions were not made on the prayer for a declaration that the 2nd Respondent had contravened the guiding principles of leadership and integrity under article 73(2) of the Constitution, 2010 the prayer was declined. In particular, there were no submissions on the specific provisions of article 73(2) of the Constitution, 2010 that could have been violated.
  16. The numerous allegations by the 2nd Respondent against the Petitioner were shown to not have been handled in due process as envisaged in article 236 of the Constitution, 2010 and in any event, the same were not referred to as a justification in the reshuffle the executive committee. Accordingly, the allegations did not serve to sanitize the otherwise offending reshuffle or deployment decision.

Application Allowed -
i) The declaration that the Respondents have, by reason of the reshuffle of April 24, 2015, contravened the petitioner’s rights, under articles 47 of the Constitution, 2010 to an administrative action which is expeditious, efficient, lawful, reasonable and procedurally fair by purporting to vary his terms of service without his consent, and to be informed in writing of the reasons of the intended alteration of the terms of his contract.
ii) The declaration that the purported reshuffle, on April 24, 2015 of the Executive Committee Officers is, in so far as it affected the Petitioner, null and void for contravening article 47 of the Constitution and being a breach of the contract entered into on August 22, 2014 by the petitioner with the 1st Respondent.
iii) The declaration that in making the purported reshuffle on April 24, 2015 and in so far as the Petitioner was affected, the 2nd Respondent offended the national values and principles set out in article 10 of the Constitution, namely failing to uphold rule of law and human rights.
iv) The order of certiorari hereby issued to remove to the Court for quashing, the purported circular dated April 24, 2015 communicating the purported reshuffle of Chief Officers of the 1st Respondent in so far as it affected the Petitioner; and for that purpose the petitioner reverts to the office held of county secretary unless lawfully removed per applicable constitutional, statutory, and contractual provisions.
v) The permanent injunction hereby issued restraining the Respondents from contravening articles 10 and 47 of the Constitution.
vi) The permanent injunction hereby issued restraining the Respondents from advertising, nominating or appointing or filling anyone to the post of County Secretary for as long as the Petitioner holds that office of County Secretary as already duly appointed to hold the office.
vii) The Respondents to pay the Petitioner’s costs of the suit.

CONSTITUTIONAL LAW Tax assessment processes ought to be inclusive of all stakeholders (both tax payers and tax collectors)

Silver Chain Limited v Commissioner Income Tax & 3 others
Judicial Review No. 2 of 2016
High Court of Kenya at Malindi
S J Chitembwe, J
November 24, 2016
Reported by Teddy Musiga

Download the Decision

Constitutional Law – Right to fair administrative action- tax assessment - claim where the tax assessment was done without the Applicant’s input in terms of explanation – whether the Respondents violated the right to fair administrative action in assessing the amount of tax due from the Applicant – Constitution of Kenya, 2010, article 47.
Tax law – tax assessment – procedure - issuance of tax assessment notice – claim that a tax payer was not issued with a tax assessment notice to enable him to move the tax appeals tribunal to contest the assessment - whether the demand for the tax was malicious, irrational and oppressive as the Applicant was not given explanation as to how the computation was made – Tax procedures Act, section 29, Tax Procedures Act, section 51.

Brief facts:

The applicants sought orders of certiorari to quash the decision of the 1st, 2nd and 3rd respondents of November 22nd, 2015 that arbitrarily levied unreasonable taxes against the applicant; that issued notice to enforce recovery measures and that issued a notice of distress. The applicant contended that the Tax Demand did not satisfy the requirement of a proper notice consistent with article 47 (1) of the Constitution. They further contended that after the tax assessment they were not issued with a tax assessment Notice in accordance with the provisions of section 29 of the Tax Procedures Act to enable them exercise their right under section 51 of the Tax Procedures Act of 2015 to move the Tax appeals Tribunal to contest the assessment.

The Respondents contended that the application was fatally defective as the Applicant only served the substantive motion without the statement that was filed with the application for leave contrary to Rule 53 (1) of the Civil Procedure Rules

Issues

  1. Whether the application was fatally defective as the Applicant only served the substantive motion without the statement that was filed with the application for leave.
  2. Whether the Respondents violated the right to fair administrative action under article 47 of the Constitution in assessing the amount of tax due from the Applicant.
  3. Whether the demand for the tax was malicious, irrational and oppressive as the Applicant was not given explanation as to how the computation was made. Read More...

Held

  1. The substantive application was filed within the twenty-one (21) days period after the orders granting leave were issued. The only requirement under Rule 53 (1) of the Civil Procedure Rules was that the application for leave had to be accompanied by a statement which gave the relevant details. There was no requirement that the statement that was used to obtain leave to apply for Judicial Review had to be served upon the Respondents. The file used to apply for leave to seek Judicial Review orders became spent when a substantive Judicial Review application was filed. There were no defects in the application.
  2. Once leave was granted, it did not become a pending suit. The Applicant had to move to the next level and file a substantive motion in accordance with the rules, after which it could then be said that there was a pending suit. Leave on its own could not sustain a suit.
  3. Section 51 of the Tax Procedures Act provided an elaborate process to be followed when a tax payer objected to tax decisions made against him. The outcome of such a decision escalated to an appeal to the Tax Appeals Tribunal established under the Tax Appeals Tribunal Act. A decision of the Tribunal could be subject to an appeal to the High Court. An appeal to the Court of Appeal could follow.
  4. As far as the procedure requiring checking of the records of a tax payer was concerned, the Respondents could not be faulted. They followed the laid down procedure and the Applicant could have engaged the Respondents and give explanation of its operations. The unfortunate thing was that the tax assessment was done without the Applicant’s input in terms of explanation.
  5. The record showed that the process started on July 21, 2015. The compliance check was to take place at the Applicant’s premises on August 5, 2015. There was no correspondence until November 12, 2015 when the Respondents notified the Applicant about the outcome of the compliance check. The letter dated November 11, 2015 raised the demanded sum of Kshs.40,509,954/=. It was not established whether the Respondents engaged the Applicant in discussions while checking the records. What could be deduced was that the Respondents unilaterally checked the records and made its own tax assessment. That was why there was a claim for taxes for 18 months ending December, 2014.
  6. The Applicant was not given an opportunity to explain his position on the sales reports or the entire operations of the company. What was being demanded as tax was what was unilaterally computed by the Respondents. Although the Respondents were empowered by the law to assess what a tax payer ought to pay, it was prudent that while undertaking such an exercise, the tax payer had to be given an opportunity to explain its position. The volumes of sales did not dictate the profit margins. It all depended on the type of business. The Applicant was running a restaurant. If one only computed the sales volume without knowing the costs of those sales as well as other outgoings such as water, electricity and garbage collection bills, then the amount of tax demanded could not reflect the truth.
  7. It was lawful for the Kenya Revenue Authority to issue a distress notice or order against a tax payer’s property. The presumption was that all lawful procedures would have been followed before the distress notice or order was issued. The Respondents were undertaking their statutory duties when they initiated the process of assessing the applicant’s taxes. It was not the intention of the law that the Respondents should take away a tax payer’s records, evaluate them without involving the tax payer and then impose the amount of tax to be paid. When the tax payer raised an objection, the response would be that the objection was late or that it was not valid since it did not state the grounds upon which it was raised. Tax payment was a constitutional requirement and the country could not meet its obligations without receiving taxes from the tax payers. Articles 209 and 210 of our Constitution gave powers to the government to impose tax.
  8. The Respondents were within their lawful mandate when their officers visited business premises and evaluated the records for tax compliance purposes. It was a known fact that most tax payers would take advantage of any laxity on the part of the Respondents and either under assess them or completely avoid paying the taxes. Enforcement of tax compliance processes had to be carried out within the confines of the law. The Constitution under article 47 called for fair administrative process. When a tax payer was called upon to pay Kshs.40,619,379/=, such a person had to be given all the opportunities to have all his queries and doubts answered and the assessment clearly explained to him. That was why the law had set up a procedure whereby those dissatisfied with the assessment could pursue appeals up to the Court of Appeal.
  9. The determination of an assessment of tax on appeal under section 88 of the Income Tax Act was aimed at giving fiscal finality for the purpose of collecting tax and it did not overrule the right of a third appeal to the Court of Appeal provided under the law.
  10. It was not clear when the applicant started paying taxes. At least payment for previous years could act as a guide when subsequent years were assessed. One had to take into account instances of deliberate self under assessment by tax payers. Any tax assessment by the Respondents had to involve the tax payer. The task of collecting taxes should not lead to discouraging tax payers from carrying on with their businesses. If the tax payers close shop, there would be no taxes to be collected. On the other hand, if no taxes were paid, there would be no funds to run government operations. That called for a balance between the tax collectors and tax payers whereby the process became inclusive as opposed to being unilateral.
  11. There had to be fairness in the process of tax assessment. If the court was of the view that the process used to assess the tax being demanded was not fair, orders of Judicial Review would be granted. The principle of fairness had an important place in the law for judicial review; and that in an appropriate case; it was a ground upon which the court could intervene to quash a decision made by a public officer or authority in purported exercise of a power conferred by law.
  12. Disputes involving tax assessment had to be dealt with under the legal procedures set up by the law. The Respondents were expected to discuss their assessment with a tax payer. If the tax payer was not satisfied with the assessment, an objection form which could be standardized should readily be available to the tax payer to lodge his objection to the assessment. The commissioner of that particular tax stream had to make his/her decision within the permitted period. Appeals to the Tax Appeals Tribunal had to be allowed and if any party was dissatisfied by the decision of the Tax Appeals Tribunal, the matter could be brought to the courts. The Courts were ill-equipped to know whether the tax assessment was proper or not. Judicial Review cases did not delve deep into the computations or assessment made by the tax collector. The domain of Judicial Review concerned itself with the process.
  13. In revenue matters it was unusual to apply for Judicial Review because there were clear and well established procedures for appeal provided by the Taxes Management Act. The Court however further observed that the fact that there was an alternative procedure available did not mean that an application for Judicial Review should never be made. Judicial Review was, however, the procedure of the last resort and was a residual procedure which was available in those cases where the alternative procedure did not satisfactorily achieve a just resolution of the Applicant’s claim.
  14. The Applicant’s objection was considered to be invalid and time barred, the Applicant’s last resort was the Court. It did not mean that the Applicant did not wish to pay the taxes. All what it was seeking was a fair assessment of the payable taxes. The assessment could give same results but he had to be explained how the computation was done. It was indicated that a director of the Applicant visited the respondents’ offices and was explained the genesis of how the case ended up to the time distress measures were taken.
  15. Section 29 of the Tax Procedures Act provided for default assessment. It gave the information that had to be indicated to a tax payer when the commissioner was notifying the tax payer on the assessed taxes. The information included the manner of objecting to the assessment.
  16. The subsequent communication from the respondents was the letter dated December 14, 2015. It was a tax arrears demand notice and not a proper tax assessment notice. Since the compliance check letter dated 12.11.2015 was not a proper tax assessment notice and of the fact that it made reference to some two sections of the law, that was section 50 of the VAT Act and section 84 of the Income Tax Act, which sections were deleted from the statutes the following month, during that transition period, it was difficult for the Applicant to know how the objection was to be pursued.
  17. The Applicant was not accorded the right to fair administrative action. The assessment of the tax was unilateral, arbitrary and oppressive. He was entitled to a clear explanation as to how the computation was made. The Respondents’ own documents indicate that during the period June 2013 to July 31, 2015, the applicant’s total sales were Kshs.55,139,701/=. The amount of principal tax demanded was Kshs.27,825,525/=. That was almost 50% of the sales. The costs of the sales and operating expenses were not included. The assessment was oppressive.
  18. The judicial Review application did not delve deep into the decision itself but the court had to be satisfied that there was fairness in the whole process. The respondents were of the view that the time for raising objection lapsed. That would mean that the applicant had no other option but to pay the assessed tax. The letters dated February 10, 2016 and March 19, 2016 called upon the applicant to contact two officers of the respondents if further clarification was required. In essence therefore objection could still be raised had the Applicant sought the clarification and felt dissatisfied. That would be in line with the spirit of the law requiring fair administrative action.
  19. Since the Applicant was obligated to pay taxes, the Respondents were ordered to issue the Applicant with a fresh notice as required under the Tax Procedure Act. The Respondents were at liberty to re-assess the tax payable once again and issue such notices as they deem necessary under the law. The Applicant had to be in a position to either pay the tax or file an objection.

Application allowed
Orders of certiorari issued quashing the decision of the 1st, 2nd and 3rd respondents; to arbitrarily levy unreasonable taxes against the applicant, to issue notice to enforce recovery measures and to issue a notice of distress.
An order of prohibition issued prohibiting the Respondents from distressing, levying distress or otherwise distressing the goods and assets of the applicant pursuant to the Notice of Distress.

Each party to bear their own costs.

CONSTITUTIONAL LAW Circumstances in which an accused person can be charged for an offence where he/she had previously been acquitted on a separate charge flowing from the same criminal transaction.

Nicholas Kipsigei Ngetich & 6 others v Republic
Criminal Case No. 123 of 2010
High Court of Kenya at Nakuru
M Odero, J
November 7, 2016
Reported by Teddy Musiga

Download the Decision

Constitutional Law – fundamental rights and freedoms – right to fair trial – rule against double jeopardy - whether there exists circumstances in which an accused person can be charged for an offence where he/she had previously been acquitted on a separate charge flowing from the same criminal transaction – Constitution of Kenya, 2010, article 50 (2) (a).
Criminal Procedure – fair trial in criminal proceedings – rule against double jeopardy – claim where an accused person was charged & later acquitted at the High Court with the offence of murder and subsequently charged at the lower court with the offence of attempted murder flowing from the same criminal transaction that he had been acquitted of at the High Court - Constitution of Kenya, 2010, article 50 (2) (a)

Brief facts:
The six accused persons were charged in the High Court with the offence of murder. They were acquitted of that offence. Later, they were again charged with attempted murder in the lower court. The victim in each charge was a different person. The applicants thus sought to have the trial before the lower court quashed on the grounds that, since they were acquitted at the High Court of an offence which occurred at the same place and time, and involved the same witnesses, their continued trial in the lower court amounted to double jeopardy and amounted to an abuse of the court process.

Issues:

  1. Whether there exists circumstances in which an accused person can be charged for an offence where he/she had previously been acquitted on a separate charge flowing from the same criminal transaction
  2. What are the tests to be applied before determining whether an accused person can be charged for an offence where he/she had previously been acquitted on a separate charge flowing from the same criminal transaction?. Read More...

Held:

  1. There is no doubt that an accused person ought not to be tried a second time regarding an offence for which he had previously been acquitted or convicted. That principle was couched in Latin which literally meant, “no one could be tried or punished twice in regards to the same event”. That was the legal protection against double jeopardy which gave right to the defense of autrefois convict or autrefois acquit.
  2. Similarly, article 50 (2) (a) of the Constitution of Kenya, 2010 provided that every accused person had the right to a fair trial which included the right not to be tried for an offence in respect of an act or omission for which the accused person had previously been either acquitted or convicted. The reasoning behind it was that there had to be finality in the legal processes. The accused person had to be protected from the prejudice he would suffer by going through a second trial after the state had seen his entire defense and to protect citizens from undue oppression from the State.
  3. It was however feasible that multiple criminal offences could arise out of the same transaction. In such situations generally two tests were applied;
    1. the same evidence test and;
    2. the same transaction test.
  4. The same evidence test bars the mounting of a second prosecution requiring the very same evidence which would have been required to convict at the first prosecution. In any situation where the same evidence would be required to sustain a conviction in any subsequent litigation, then that subsequent litigation was prohibited by the double jeopardy rule.
  5. In order for a plea of autrefois acquit to apply, the offence charges had to be the same as the offence for which one had previously been acquitted. The mere fact that the two trials emanated from the same episode, had the same witnesses or similar evidence or that two separate crimes were committed in the same incident was not the true test. Therefore, a charge of murder and manslaughter could not arise from the same death. However, there could be two distinct charges for murder and robbery when the two offences were committed at the same time. Those were two distinct offences and the evidence required to prove one charge does not prove the other.
  6. There was no rule or principle to the effect that evidence which had first been used in support of a charge which was not proved could not be used to support a subsequent and different charge. The test was whether the essential ingredients of the offence of robbery or the evidence that was necessary to sustain it would suffice to prove a charge of manslaughter.
  7. The fact that the evidence in a previous case corresponds overwhelmingly with the evidence in a later case was not in itself sufficient grounds to apply the principle of autrefois acquit. Therefore in applying the same evidence rule, a court will look not at the fails but at the ingredients of the offences. The question was whether the ingredients required to prove one offence were the same as those required to prove the second offence.
  8. In the instant case, the six accused persons were charged in the High Court with the offence of murder. They were acquitted of that offence. Later, they were again charged with attempted murder. The victim in each charge was a different person. The fact that they were acquitted of murdering the deceased person did not mean the applicants were equally innocent of attempting to cause the death of the victim (complainant) in the lower court case. The two cases could never be deemed to be the same.
  9. The same transaction test clarifies as the same offence all acts which occurred out of the same criminal episode. The same test transaction limited piecemeal prosecution by compelling the state to prosecute at one trial all offences which had been committed with a common motivating intent and which had a single ultimate goal.
  10. The test to determine whether a fundamental unfairness had resulted due to multiple trials was that where the same act or transaction constituted a violation of two distinct statutory provisions, the tests to be applied to determine whether they were two offences was whether each provision required a proof of a fact which the other did not.
  11. The rule against double jeopardy did not forbid the state from prosecuting different offences at consecutive trials even though they came out of the same occurrence. The test was whether such a course had led to fundamental unfairness.
  12. Evidently, the applicants could not therefore rely on the double jeopardy rule. The victims in both crimes were different – one was deceased and one was still alive. The charges they faced were separate and distinct. The mere fact that the offences occurred in the same transaction was not a bar to the second charge in the lower court. Whilst it could be true that the state took 2 years to lay charges of attempted murder, there was no time limit to a criminal charge. Thus the instant application failed.

Application dismissed. The matter in CMCC NO. 287 OF 2012 was directed to proceed to its logical conclusion.

CRIMINAL LAW Court has a duty to ensure a plea of guilty is unequivocal when an Accused Person is unrepresented.

Simon Gitau Kinene v Republic
Court of Appeal at Mombasa
Criminal Appeal No 9 of 2016
October 25, 2016
J Ngugi, J
Reported by Phoebe Ida Ayaya

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Criminal Law- mental illness-record of mental illness- whether the trial court record did not have any indication that there was an attempt to bring to its attention the suspicion that the appellant was mentally ill-Penal Code section 11; Criminal Procedure Code section 162
Criminal Procedure –pleas-plea of guilty-equivocal plea-validity of an equivocal plea- whether the plea of guilty by the Appellant was equivocal and if the Accused person understood the consequences of that plea – Criminal Procedure Code
Criminal Law-sentencing- principles of sentencing- whether the sentence meted to the accused was harsh and disproportionate -Penal Code section 26(2)

Brief facts:
The Appellant appealed against both conviction and sentence of the Gatundu Principal Magistrate’s Court Criminal Case No. 12 of 2016. The Appellant was arraigned before the Trial Magistrate on January 6, 2016 charged with a single count of trafficking in narcotic drugs (bhang) contrary to section 4(a) as read together with sub-section 2(a) of the Narcotic Drugs and Psychotropic Substances Control Act No. 4 of 1994. The Appellant argued that it was wrong for the Trial Court to have proceeded with the trial without first calling for a mental assessment report. Had the Trial Court done that, it would have discovered that the Appellant was mentally ill and therefore unfit to stand trial thus the current appeal.

Issues:

  1. Whether the Trial Court record did not have any indication that there was an attempt to bring to its attention the suspicion that the Appellant was mentally ill
  2. Whether the plea of guilty was equivocal and if the Accused person understood the consequences of such a plea according to section 11 of the Penal Code
  3. Whether the sentence meted to the accused was harsh and disproportionate .Read More...

Relevant Provisions of law
Penal Code
Section 11 provides as follows:

Every person is presumed to be of sound mind, and to have been of sound mind at any time which comes in question, until the contrary is proved.

Section 26(2) provides as follows

Save as may be expressly provided by the law under which the offence concerned is punishable, a person liable to imprisonment for life or any other period may be sentenced to any shorter term.

Criminal Procedure Code
Section 162 reads as follows:

162. (1) When in the course of a trial or committal proceedings the court has reason to believe that the accused is of unsound mind and consequently incapable of making his defence, it shall inquire into the fact of unsoundness.
(2) If the court is of the opinion that the accused is of unsound mind and consequently incapable of making his defence, it shall postpone further proceedings in the case.

Narcotic Drugs and Psychotropic Substances Control Act
Section 4(a) provides that:

Any person who trafficks in any narcotic drug or psychotropic substance or any substance represented or held out by him to be a narcotic drug or psychotropic substance shall be guilty of an offence and liable—

a. in respect of any narcotic drug or psychotropic substance to a fine of one million shillings or three times the market value of the narcotic drug or psychotropic substance, whichever is the greater, and, in addition, to imprisonment for life.

Held:

  1. The law is that every accused person is presumed to be of sound mind under section 11 of the Penal Code. The burden is on the Accused Person to rebut this presumption. However, the Court is obligated under section 162 to take action – for example by ordering a mental assessment – where it comes to the attention of the Court that the Accused Person may be of unsound mind.
  2. The Trial Court could not be faulted for proceeding as it did in the circumstances. There was simply no material brought to the attention of the Trial Court to suggest that the Appellant was of unsound mind to warrant further inquiry by the Court. In the circumstances, that ground of appeal was unavailing to the Appellant.
  3. When a person was charged, the charge and the particulars should be read out to him, so far as possible in his own language, but if that was not possible, then in a language which he could speak and understand. The magistrate should then explain to the accused person all the essential ingredients of the offence charged. If the accused admitted all those essential elements, the magistrate should record what the accused has said, as nearly as possible in his own words, and then formally enter a plea of guilty.
  4. The magistrate should next ask the prosecutor to state the facts of the alleged offence and, when the statement was complete, should give the accused an opportunity to dispute or explain the facts or to add any relevant facts. If the accused did not agree with the statement of facts or asserts additional facts that, if true, might raise a question as to his guilt, the magistrate should record a change of plea to "not guilty" and proceed to hold a trial. If the accused did not deny the alleged facts in any material respect, the magistrate should record a conviction and proceed to hear any further facts relevant to sentence. The statement of facts and the accused's reply must be recorded.
  5. The first point for analysis was an important point of departure namely the trite law to the effect that whether a guilty plea was unequivocal or not depended on the circumstances of the case. Differently put, an appellate or a revising court was to take the totality of circumstances into account in determining the equivocality or otherwise of a guilty plea.
  6. With the totality of circumstances test in mind, the following observations were appropriate from the proceedings in the Magistrates’ court. First, although the Court record indicated that the charge and every element thereof was stated by the Court to the accused person in the language he understood, it was critical that the Court did not state which language was used to explain. Second, while Adan Case stipulated the salutary practice that the Court records the words of the Accused Person verbatim, that did not happen in the instant case. Instead, the Magistrate recorded the response in English: “It is not true.”
  7. The fact that the Accused engaged in mitigation could be an indication that he understood what was going on but a guilty plea should not be left to any deductions or conjecture. It should be clear, unambiguous and unequivocal. It should be even more so when the Accused faces a serious charge capable of attracting custodial sentence.
  8. Extra caution needs to be taken in the case of undefended Defendants who plead guilty. Where an Accused Person was unrepresented, the duty of the Court to ensure the plea of guilty was unequivocal was heightened.
  9. Where there was an unrepresented Accused charged with a serious offence, care was always taken to see that the Accused understood the elements of the offence, especially if the evidence suggested that he had a defence. To put it plainly, then, one may add that where an unrepresented Accused Person pled guilty to a serious charge that was likely to attract custodial sentence, the obligation of the Court to ensure that the Accused Person understood the consequences of such a plea was heightened. In the present case, the Court took no extra effort to ensure that. In the circumstances, given the seriousness of the charge the Court was about to convict and sentence the Accused Person for, the Court was to warn the Accused Person of the consequences of a guilty plea. It was unsafe to uphold the guilty plea in the circumstances.
  10. Section 4(a) does not impose mandatory sentence. Since given that the conviction on a guilty plea was not safe in the circumstances automatically quashed the sentence as well, for future guidance it was important to remind trial courts that the provisions of section 4(a) of the Act merely give the Trial Court discretion in sentencing and did not impose any minimum sentences. Trial Courts might be well advised to bear in mind the provisions of 26(2) of the Penal Code.
  11. The section made it clear that unless the law prescribing the sentence expressly provided otherwise, a court could sentence an Accused Person to a shorter period than that prescribed in the law prescribing the sentence. In other words, the Trial Court was clothed with the discretion to impose a sentence of imprisonment which was shorter than that prescribed except where mandatory minimum sentences were expressly prescribed.

Appeal allowed:
i. The guilty plea entered in Gatundu Law Courts in Criminal Case no 12 of 2016 set aside. In its place a plea of not guilty shall be recorded in the case.
iii. The sentenced imposed on the Appellant set aside.
iv. The Appellant shall be released from Prison forthwith and shall, instead, be placed on remand pending his presentation before the Magistrates’ Court for a retrial.
v. The Appellant shall be presented before the Principal Magistrate, Gatundu Law Courts on Thursday, October 27, 2016 for directions. The case shall be allocated to a magistrate other than the Honourable W. Ngumi who initially heard the case.
vi. The Deputy Registrar directed to send back the Trial Court file in Criminal Case No. 12 of 2016 and a copy of this file and ruling to the Principal Magistrate’s Court, Gatundu for compliance.

CONSTITUTIONAL LAW When an advocate can be disqualified from representing a client

Republic v Silas Mutuma Marimi & 2 others
Criminal Case 5 of 2016
High Court at Nakuru
M Odero, J
September 30, 2016
Reported by Nelson Tunoi

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Constitutional Law – fundamental rights and freedoms – right to legal representation – whether the right to legal representation was absolute - whether the application to have advocate representing the accused persons disqualify himself from the trial hearing infringed on the accused persons’ right to counsel representation as enshrined in the Constitution – where the advocate had previously been engaged by the family of the deceased to hold a watching brief for them - Constitution of Kenya, 2010, article 50(2)(g)
Advocate/client – legal representation – conflict of interest – where advocate representing the accused persons had previously been engaged by the family of the deceased to hold a watching brief for them – whether such advocate could proceed to act for the accused persons at the trial – application seeking to disqualify the advocate from representing the accused persons – whether the application was merited – Advocates Practice Rules, Rule 9
Words and phrases – Chinese Wall Principle –- a metaphor used to refer to an information barrier – metaphorical barrier preventing information revealed from one partner flowing to the other partner in a law firm

Brief facts:
Three accused persons were jointly charged with murder contrary to section 203 as read with section 204 of the Penal Code. Before the trial could commence, the State Counsel raised an objection regarding the advocate representing the three accused persons. The State Counsel sought to have the accused persons’ advocate disqualified from acting and participating in the murder trial on the basis that he was a partner in a law firm, where he had previously been engaged by the family of the deceased to hold a watching brief for them. The State Counsel submitted that Rule 9 of the Advocate (Practice) Rules barred the accused persons’ advocate from purporting to represent the accused persons in the murder trial. She further submitted that the existence of an advocate-client relationship between the deceased’s family and advocate created a fiduciary relationship which prevented the advocate from disclosing confidential information that might have been disclosed to him as a result of and in the course of that advocate-client relationship.
In opposing the application, the advocate submitted that the accused persons had a constitutional right to be represented by counsel of their choice and that the Court should not interfere with that right as it had not been demonstrated that the complainants would suffer any prejudice if he continued to act in the matter. The advocate further argued that Rule 9 of the Advocates (Practice) Rules was not applicable in the matter as it only served to bar an advocate from acting in a matter where it was likely that he would be called to testify as a witness. Further, the advocate submitted that where a firm had more than one advocate then under the Chinese Wall Principle, there existed a veil of confidentiality that prevented the disclosure of information from one advocate to the other. The advocate explained that he did not personally handle the brief from the complainants as during the material time he was not in active legal practice, having been appointed as the Speaker of the Migori County Government.

Issues:

  1. Whether the application to have counsel representing the accused persons disqualify himself from the trial hearing infringed on the accused persons’ right to counsel representation as enshrined in the Constitution.
  2. Whether Rule 9 of the Advocates Practice Rules - when an advocate could cease appearing in a matter where he may be called as a witness to give evidence - was applicable to the instant case.
  3. Whether the complainants were likely to suffer prejudice despite the fact that there was no likelihood of the advocate being called as a witness in the case. Read More...

Held:

  1. An accused person was guaranteed the right to be represented by counsel of his own choice. However, the right to legal representation by an advocate of his choice was not absolute. The right to legal representation could be limited in two instances; firstly where there was a possibility that the advocate might be called as a witness in the case and secondly, where there existed a conflict of interest between two clients out of a previous advocate/client fiduciary relationship with the opposing client.
  2. Rule 9 of the Advocates Practice rules would not be applicable in the instant case since the advocate’s chances of being called as a witness in the murder trial was remote. Neither had he recorded any statement with the police nor had the prosecution given any indication that they intended to summon him as a witness during the trial.
  3. Although there was no general rule that an advocate could not act for one party in a matter and then go on to act for the opposing party in subsequent litigation, the advocate could however be barred from so acting when his representation of the new client would result in real prejudice or real mischief against the former client. However there was no hard and fast rule since each case should be considered on its own merits.
  4. The advocate-client fiduciary relationship placed a duty on the advocate not to disclose any information imparted to him during his retainer to a third party without the express consent of a client. Subsequently, an advocate was under an obligation to zealously represent his client and was expected to use all the information and skills he possessed to advance his clients interest, or defend his client against a criminal charge. Therefore an advocate should ethically guard against allowing himself to be in a position that would threaten to put at risk his obligation to maintain the professional confidence imparted to him by his former client in the representation of the new client.
  5. The Chinese Wall principle referred to a metaphorical barrier which prevented information revealed from one partner flowing to the other partner in a law firm. The appropriate test in determining whether such a Chinese Wall was an effective barrier to the flow of information from one advocate to another in a manner that would be deemed prejudicial was one of reasonable anticipation, i.e. where a reasonable man with knowledge of the facts would reasonably anticipate that there was a danger that information gained while acting for the former client would be used against him or there was a degree of likelihood of mischief. The reasonable man must be in knowledge of all facts including measures proposed to be taken by the firm and show that there was likelihood of breach notwithstanding those measures that were in place. The Chinese Wall was relevant if there was proof of the existence of adequate mechanisms to protect the flow of information (even inadvertently). The Chinese Wall would only be relied on in very special cases.
  6. There was no dispute that the firm who were now on record for the accused persons were previously engaged by the complainants to watch brief in the same matter, involving the same murder. Undoubtedly in the course of that retainer by the complainants, confidential information must have been imparted by the complainants to their advocate. Such information was relevant to the instant case and if the same was disclosed, the complainants would in actual fact be prejudiced. The complainants had not consented to the disclosure of that information. The burden shifted to the advocate to demonstrate that there existed adequate measures in place to protect the flow of that information from his partner to himself.
  7. The fact that the firm had more than one partner, the fact that the advocate was at the material time not in active practice in his firm, did not provide sufficient assurance that a Chinese Wall existed. The Court took judicial notice of the fact that partners working together in a law firm met and held discussions on daily basis and there was no doubt that they discussed the briefs which the firm had.
Application allowed; accused persons at liberty to engage another lawyer to act for them.

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