Weekly Newsletter 002/2020



Kenya Law

Weekly Newsletter


Need to harmonize the regulations under the Environmental Management and Coordination Act, Survey Act and Physical Planning Act to take into consideration high and low water marks when measuring and defining riparian reserves
 
Milimani Splendor Management Limited v National Environment Management Authority and 4 others
Environment and Land Court at Nairobi
Petition 61 of 2018
K Bor, J
October 11, 2019
Reported by Ian Kiptoo
Download the Decision

Environmental Law– riparian reserve – protection of riparian reserves – measurement of riparian reserves – considerations to be taken into account - what were the considerations that ought to be considered when determining the boundaries of privately held land that was adjacent to rivers and water bodies

Statutes – interpretation of statutes – interpretation of regulations on the measurement of riparian reserves – where there were conflicting legal provisions on the measurement of the riparian reserves - whether there was need to harmonize the regulations under Environmental Management and Coordination Act, Survey Act and Physical Planning Act to take into consideration high and low water marks when measuring and defining riparian reserves - Survey Regulations of 1994, rule 111; Environmental Management and Coordination (Water Quality) Regulations, 2006, rule 6(c); Physical Planning (Subdivision) Regulations of 1998, regulation 15

Words and Phrases – watermark – definition of - the highest or lowest point to which water rises or falls - Black’s Law Dictionary, 10th edition

Brief Facts:
The petitioner sought a declaration that the respondents had violated its right to property guaranteed under article 40 of the Constitution of Kenya, 2010 (Constitution) and an order to quash the decision of the 1st respondent (National Environment Management Authority) which it issued an improvement notice to the petitioner together with an order to restrain the respondents from demolishing, destroying, evicting or in any way interfering with the quiet possession of the petitioner’s property.
The petitioner stated that the multiple laws on the size of the riparian reserve were not in harmony and that it should not therefore be condemned in light of the differences in the riparian reserves provided by the different pieces of legislation. It submitted further that it would be an illegality to use any other measurement to assert an encroachment on its part on the riparian reserve when it had complied with its deed plan by keeping the 10 metres from the centre of the Kirichwa Kubwa River.
On the other hand, the respondents contended that the process leading to the marking of properties constructed on riparian land for demolition was done under the Nairobi Regeneration Program and that restoration of riparian reserves was in compliance with Chapter 3 (3.16 (ii) of Sessional Paper No. 7 of 2017 of the National Land Use Policy. In addition, that a riparian reserve was deemed to be a way leave or reserve along any river, stream or watercourse of not less than 10 metres in width on each bank except in areas prone to flooding.


Issues:
  1. What were the considerations that ought to be considered when determining the boundaries of privately held land that was adjacent to rivers and water bodies?
  2. Whether there was need to harmonize the regulations under Environmental Management and Coordination Act, Survey Act and Physical Planning Act to take into consideration high and low water marks when measuring and defining riparian reserves.
Held:
  1. A local authority such as the 3rd respondent could serve an enforcement notice on the owner or occupier of land under section 38 of the Physical Planning Act when it came to the attention of the local authority that the development of land was carried out without the required development permission or if the conditions for the grant of the development permission were not complied with. The provisions of the Physical Planning Act showed that the 3rd respondent had a role to play in the approval of the petitioner’s development and was therefore a necessary party in the proceedings.
  2. The petitioner neither produced any survey records to show where the river originally flowed nor did it attempt to demonstrate that the river had actually changed its course. A river included the bed, the banks, the adjacent land as well as the flood plain. The flood plain included the portion of the river valley that was covered with water when the main river channel overflowed during floods. The risk of the river flooding during heavy rains justified the need for a buffer zone or verge. Rivers were of different sizes and widths and the width of a river also varied at different points of its flow.
  3. Geographical factors affected the size, shape and course of a river which could also change over time. A river could be narrower upstream while lowland streams which were prone to meandering could have broader valleys. In determining the riparian reserve, one of the factors for consideration was whether the river had a well-defined channel. For the protection and rehabilitation of the riparian ozone, it would be helpful if there was a base map and other cadastral drawings mapping out the river channel and the riparian reserve in respect of Kirichwa River.
  4. Section 9 of Environmental Management and Coordination Act (EMCA) enjoined the 1st respondent to co-ordinate the various environmental management activities being undertaken by lead agencies and to promote the integration of environmental considerations into development policies, plans, projects and programmes to ensure the proper management and use of environmental resources. Sections 108 and 111 of EMCA empowered National Environment Management Authority (NEMA) and the court respectively to issue an environmental restoration order to any person to prevent the person from taking any action that was reasonably likely to cause harm to the environment. The court and NEMA were placed on the forefront in the protection of the environment and lent credence to the preamble to the Constitution that the people of Kenya were respectful of the environment and were determined to sustain it for the benefit of future generations.
  5. Section 42 of EMCA made provision for the protection of rivers, lakes, seas and wetlands including prohibiting any person from erecting any structure or part of it in or under the river or disturbing the river without the approval of NEMA. Rivers and the riparian reserves formed part of the environment under the definition in section 2 of EMCA.
  6. Section 29 of the Physical Planning Act empowered local authorities, which referred to county governments, to prohibit or control the use and development of plots within its area. The section mandated the local authority to consider and grant development permissions. It could also prohibit the subdivision of existing plots into smaller areas. One of the conditions to be complied with in a scheme of subdivision under regulation 15 of the Physical Planning (Subdivision) Regulations of 1998 was that way leaves or reserves along any river, stream or water course should be of not less than 10 metres in width on each bank except in areas which flood.
  7. Rule 111 of the Survey Regulations of 1994 provided for a reservation of not less than 30 metres in width above high-water to be made for Government purposes but allowed the Minister to direct that a lower width of the reservation be made in special circumstances. It was not clear from the regulation how the riparian reserve was to be measured considering that rivers varied in sizes and could also meander in their course as they flowed downstream. Regulations 40 and 88 of the Survey Regulations of 1994 stipulated where and how line and river beacons were to be placed by the surveyor. Rule 6(c) of the Environmental Management and Coordination (Water Quality) Regulations, 2006 prohibited any person from cultivating or undertaking any development activity within the full width of a river or stream to a minimum of six metres and maximum of thirty metres on either side based on the highest recorded flood level.
  8. Rivers and all land between the high and low watermarks constituted public land pursuant to article 62 of the Constitution. The dictionary defined the high watermark in a river not subject to tides as the line that the river impresses on the soil by covering it long enough to deprive it of agricultural value and the low watermark as the point in a river to which the river recedes at its lowest stage. The Environmental Management and Co-ordination (Wetlands, River Banks, Lake Shores and Sea Shore Management) Regulations 2009 defined the high watermark as the historical recorded point of the highest level of contact between the water and the bank while the low watermark was defined as the historical recorded point of the lowest level of contact between the water and the bank. The river bank was defined as the rising ground from the highest normal watermark bordering the river in the form of rock, mud, gravel or sand; and in case of flood plains would included the point where the water surface touched the land which was not the bed of the river.
  9. The Regulations under EMCA came into force later than those made under the Survey Act and Physical Planning Act. In defining the riparian reserve, all those pieces of legislation did not take into consideration the land between the high and low watermarks stated in the Constitution of 2010. From the definition of the high and low water marks in the Environmental Management and Co-ordination (Wetlands, River Banks, Lake Shores and Sea Shore Management) Regulations 2009, it was evident that the measurement of the riparian reserve was to be pegged on the riverbank and the highest point on the land which water got to during flooding. The riparian reserve was not to be measured from the centre of the river as the petitioner contended. There were conflicting legal provisions on the measurement of the riparian reserves in Kenya and there was need for Parliament to harmonise the different laws to guide the surveyors in determining the boundaries of privately held land that was adjacent to rivers and other water bodies.   
  10. From the definition of the high and low watermarks in the Regulations made under EMCA, it was evident that the measuring of the 10 metre riparian reserve from the middle of River Kirichwa to the petitioner’s suit land was erroneous as it did not take into account the high and low watermarks which were determined with reference to the level of contact between the water and the bank and not from the centre of the river. There was no evidence to show that the highest recorded flood level for Kirichwa Kubwa River was taken into consideration when the survey of the riparian reserve adjacent to the petitioner’s land was done.
  11. Article 69(1) of the Constitution enjoined the State to meet several responsibilities in relation to the environment, some of which were to ensure the sustainable exploitation, utilisation, management and conservation of the environment and natural resources and to eliminate activities that were likely to endanger the environment. Sustainable development was one of the national values and principles of governance under article 10 of the Constitution which bound all state organs, public officers and all persons whenever they applied or interpreted any law or when they made or implemented public policy decisions. Those constitutional imperatives should not only guide the respondents, but also the Nairobi Regeneration Committee and the Multi-Agency Team, as they reclaimed the riparian reserves in Nairobi.
  12. It behoved every person to play an active role in environmental protection in light of the article 69(2) of the Constitution which placed the duty on every person to cooperate with state organs and other persons to protect and conserve the environment and ensure ecologically sustainable development. Construction of buildings on a riparian reserve would have a deleterious effect on the flow of the river with serious consequences for the ecology and the court was enjoined to apply the prevention principle in preventing activities that could cause damage or harm to River Kirichwa.
 
Petition dismissed with each party to bear own costs.

Orders:
  1. The 1st, 2nd and 3rd respondents directed to undertake a survey of Kirichwa Kubwa River from its source all the way downstream within 90 days of the date of the judgment to determine the boundary between the river and the adjacent land owners whose land abut the riparian reserve and with a view to restoring the riparian reserve for Kirichwa Kubwa River.
  2. The measurement of the riparian reserve would be based on the high and low watermarks and not the centre of the river in conformity with the definition of the high and low watermarks under the Regulations made under EMCA.
Kenya Law
Case Updates Issue 002/2020
Case Summaries

STATUTES Section 44A of the Banking Act on in duplum rule that provides that accrued interest charged should not exceed the loan advanced applies retrospectively to non-performing loans.

Kenya Hotels Ltd v Oriental Commercial Bank Ltd (Formerly known as The Delphis Bank Limited) [2019] eKLR
Civil Appeal 252 of 2009
Court of Appeal at Nairobi
W Ouko, (P), SO Kantai, S Gatembu-Kairu, JJA
October 25, 2019
Reported by Mathenge Mukundi

Download the Decision

Statutes – interpretation of statutory provisions – interpretation of section 44A of the Banking Act – where the Banking Act was amended to introduce a section that prohibited the lenders from charging interest more than the loan facility advanced to the borrower (in duplum rule) - what were the situations upon which the in duplum rule as stated in section 44A of the Banking Act was designed to apply - whether the in duplum rule as stated in section 44A of the Banking Act applied retrospectively – Banking Act, section 44A
Civil Practice and Procedure – appeals – issues that can be addressed in appeals - where an issue was not canvassed, pleaded or raised at the trial court or included in the memorandum of appeal – whether the appellate court could consider or deal with issues and matters that were not heard or determined by the trial court – whether the appellate court could entertain new grounds of appeal where the appellant had not sought the leave of the court – Court of Appeal Rules, rules 104 and 107

Brief Facts:
At the centre of the dispute was a memorandum of equitable mortgage by deposit of documents of title registered in favour of Delphis Bank Limited, the predecessor of the respondent in respect of a bridging loan facility of Kshs. 60,000,000 advanced to the appellant. To secure the facility, the appellant deposited with the respondent a certified copy of title deed. When the appellant defaulted in the repayment, the respondent approached the High Court for statutory power of sale of the secured parcel of land to recover the loan and accrued interest.
The High Court allowed the respondent to sell the secured parcel of land to recover the outstanding loan facility. Aggrieved by the High Court’s decision the appellant appealed.

Issues:

  1. Whether an originating summons would be invalidated if the issues raised therein were complex and would require the calling of viva voce evidence.
  2. Whether an appellate court could consider or deal with issues that were not canvassed, pleaded or raised at the trial court.
  3. Whether under the circumstances, a valid equitable mortgage was created under the provisions of the Banking Act, the Equitable Mortgages Act and the Land Control Act.
  4. Whether section 44A of the Banking Act on in duplum rule that provided that accrued interest charged should not exceed the loan advanced applied retrospectively to non-performing loans. Read More..

Relevant Provisions of the Law.
Banking Act
Section 44A
Limit on interest recovered on defaulted loans

(1) An institution shall be limited in what it may recover from a debtor with respect to a non-performing loan to the maximum amount under subsection (2).
(2) The maximum amount referred to in subsection (1) is the sum of the following—

(a) the principal owing when the loan becomes non-performing;
(b) interest, in accordance with the contract between the debtor and the institution, not exceeding the principal owing when the loan becomes non-performing; and
(c) expenses incurred in the recovery of any amounts owed by the debtor.

(3) If a loan becomes non-performing and then the debtor resumes payments on the loan and then the loan becomes non-performing again, the limitation under paragraphs (a) and (b) of subsection (1) shall be determined with respect to the time the loan last became non-performing.

(4) This section shall not apply to limit any interest under a court order accruing after the order is made.

(5) In this section—

(a) “debtor” includes a person who becomes indebted to an institution because of a guarantee made with respect to the repayment of an amount owed by another person;
(b) “loan” includes any advance, credit facility, financial guarantee or any other liability incurred on behalf of any person; and
(c) a loan becomes non-performing in such manner as may, from time to time, be stipulated in guidelines prescribed by the Central Bank.

(6) This section shall apply with respect to loans made before this section comes into operation, including loans that have become non-performing before this section comes into operation:
Provided that where loans become non-performing before this section comes into operation, the maximum amount referred to in subsection (1) shall be the following—

(a) the principal and interest owing on the day this section comes into operation; and
(b) interest, in accordance with the contract between the debtor and the institution, accruing after the day this section comes into operation, not exceeding the principal and interest owing on the day this section comes into operation; and
(c) expenses incurred in the recovery of any amounts owed by the debtor.

Held:

Per W Ouko, (P), JA (concurring)

  1. The procedure of originating summons was not limited only to matters in respect of which facts were not in dispute. If it turned out that the issues raised in the originating summons were complex and would require the calling of viva voce evidence, that did not invalidate the application. Under order 36 rule 10 of the Civil Procedure Rules (repealed) where a matter appeared to the court at any stage of the proceedings that it ought to begin by filing a plaint, it would order the proceedings to continue as if it was a plaint filed.
  2. An originating summons could not be defeated merely because the dispute was highly contentious, complex or involving serious questions of law. As a matter of procedure and long practice, directions were invariably taken in actions commenced by originating summons. It was at that point that parties and the court had the opportunity to decide whether the summons could be determined on an affidavit evidence, written or oral submissions, or by calling viva voce evidence.
  3. Submissions had to be founded on the issues before the court and the evidence on record regarding the issue. A party was not at liberty to change the nature of their case surreptitiously at the submissions stage. The philosophy behind the appellate system restricted the appellate court to consider only those issues that were canvassed before and perhaps determined by the trial court.
  4. The presumption of the law was that only valid and proper documents of title could be delivered pursuant to a mortgage. In the instant case, certified copies of title to the two properties were deposited. Under the Equitable Mortgages Act it was the act of depositing a document to immovable property and the intent with which it was accompanied that constituted the security. The memorandum was duly signed by a director of the appellant on the same day the certificate of registration of mortgage was issued. The memorandum constituted a written contract which became an integral part of the transaction and was itself an operative instrument.
  5. There was no proof that the funds were advanced to Block Hotels Limited and that through manipulation of documents the appellant became the victim or that the respondent and the other companies associated with it were engaged in insider lending. The appellant applied and was granted a bridging loan facility in the sum of Kshs. 60,000,000 to be repaid in one amount inclusive of interest and principal on or before March 21, 2001.
  6. The in duplum rule was to the effect that interest ceased to accumulate upon any amount of loan owing once the accrued interest equaled the amount of loan advanced. The in duplum rule was concerned with public interest aimed at protecting borrowers from exploitation by lenders who permitted interest to accumulate to astronomical figures. It was also meant to safeguard the equity of redemption and safeguard against banks making it impossible to redeem a charged property. A clear understanding and appreciation of the in duplum rule was meant to protect both sides.
  7. Section 44A of the Banking Act was intended to apply retroactively. It was designed to apply in two situations; interest on non-performing loans from the date of the amendment of section 44 of the Banking Act and in respect of loans made before the introduction of section 44A, including loans that had become non-performing before that section came into operation. The parties to the appeal to calculate interest due on the sum advanced to the appellant strictly in accordance with section 44A (6) of the Banking Act.
  8. Per SO Kantai, JA (concurring)

  9. Section 44 of the Banking Act which came into operation in 2007 did various things including the introduction of section 44A on in duplum rule. That section spoke to the subject of loans offered by commercial banks had retrospective effect and applied to loans made before the section came into effect including loans that had become non-performing before the section 44A came into operation. That provision of law was concerned with the public interest it protected the lender and borrower and disallowed the practice witnessed in commercial transactions before 2007 where loans could balloon to such astronomical figures that borrowers had no capacity or ability to repay. It safeguarded the equity of redemption so that borrowers who had difficulty meeting their obligations after borrowing loans had a reasonable opportunity to repay and redeem properties charged to banks as security for loans.
  10. The loan facility was advanced by the respondent to the appellant with interest at 22% per annum. The appellant did not meet its obligations and the respondent was entitled to recover the loan sum with interest.

Per S Gatembu-Kairu, JA (dissenting)

  1. The question whether the interest charged by the respondent on the loan advanced to the appellant was in accordance with section 44A of the Banking Act could not properly be raised for the first time in the appeal when it was never an issue in the lower court. If the appellant was merely introducing a ground of appeal that was properly founded on the evidence that was adduced and canvassed before the trial court, which it was alleged the trial court ignored or misapplied, the court would readily allow the amendment. Different considerations would however apply if the applicant was seeking to introduce a totally new ground of appeal that was not pleaded, evidence adduced, canvassed and determined by the trial court.
  2. Where the applicant sought to introduce an entirely new point there were well known strictures to ensure that an appellate court did not metamorphose into a trial court and make first instance determinations without the benefit of the input of the court from which the appeal arose. The court would not consider or deal with issues that were not canvassed, pleaded or raised at the lower court. For a matter to be a ground of appeal it had to have been sufficiently raised and succinctly made an issue at trial.
  3. The belated attempt by the appellant to raise the matter of section 44A of the Banking Act together with other grounds of appeal. To compound the situation, there was absolutely no reference to the complaint in the appellant’s memorandum of appeal neither did the appellant apply for leave of the court under rule 107 of the Court of Appeal Rules to argue that ground. It was plainly an ambush which was not a matter within the province of the appeal. The appeal would have been dismissed without a qualifying order.

Appeal partly allowed with costs to the respondent.

CONSTITUTIONAL LAW

Standing order 65 of the Kisii County Assembly Standing Orders which precluded nominated Members of County Assembly from becoming heads of ward delegations declared unconstitutional for being discriminatory

Karen Nyamoita Magara & 14 others v Kisii County Assembly Services & 2 others; Attorney General (Interested Party)
Constitutional Petition 1 of 2019
High Court at Kisumu
F A Ochieng, J
September 30, 2019
Reported by Kakai Toili

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Constitutional Law – fundamental rights and freedoms – right to equality and freedom from discrimination – proof of existence of discrimination - what was required to prove the existence of discrimination
Statutes – interpretation of statutory provisions – interpretation of standing order 65 of the Kisii County Assembly Standing Orders – where standing order 65 precluded nominated Members of County Assembly from becoming heads of ward delegations - whether standing order 65 violated article 10 of the Constitution on national values and principles of governance – Constitution of Kenya, 2010, articles 10 and 123; Kisii County Assembly Standing Orders, standing order 65
Devolution – county governments – county assemblies – members of county assemblies – voting powers of nominated vis a vis elected members of county assemblies – where it was alleged that nominated Members of the Kisii County Assembly were not entitled to vote - whether there was a distinction between an elected and a nominated member of a county assembly with regard to voting in the County Assembly – Constitution of Kenya, 2010, article 123; Kisii County Assembly Standing Orders, standing order 65

Brief facts:
The petitioners were Members of the Kisii County Assembly, who were duly nominated to represent minorities, vulnerable and special interest groups including women, persons with disability, youth and elder members of the society. The petitioners alleged that the Kisii County Assembly (County Assembly) passed an amendment to standing order 65 of the County Assembly of Kisii(Standing Orders), so that the nominated MCAs were restrained and prevented from voting in the Assembly on any question and to make voting a privilege reserved for elected MCAs.
The petitioners claimed that pursuant to the Commission of Revenue Allocation Circular (the Circular), the Kisii County Assembly Board became obliged to provide the petitioners with office space, resources for office operations; and three members of staff. However, the petitioners claimed that they had been compelled to spend their private financial resources in the discharge of their respective public duties because the respondents had failed to make available resources which the petitioners needed to carry out their duties. The petitioners asked the court to order the County Assembly to provide them with the resources cited in the Circular.

Issues:

  1. Whether standing order 65 of the Kisii County Assembly Standing Orders, which precluded nominated Members of County Assembly from becoming heads of ward delegations, was discriminatory and violated article 10 of the Constitution on national values and principles of governance.
  2. What was required to prove the existence of discrimination?
  3. Whether there was a distinction between an elected and a nominated member of a county assembly with regard to voting in the County Assembly. Read More...

Relevant Provisions of the Law
Constitution of Kenya, 2010
Article 123
(1) On election all the members of the Senate who were registered voters in a particular county shall collectively constitute a single delegation for the purposes of Clause (4) and the member elected under Article 98 (1)

(a) shall be the head of the delegation.

(2) When the Senate is to vote on any matter other than a Bill, the Speaker shall rule on whether the matter affects or does not affect counties.
(3) When the Senate votes on a matter that does not affect counties, each senator has one vote.
(4) Except as provided otherwise in this Constitution, in any matter in the Senate affecting counties –

S

(a) each county delegation shall have one vote to be cast on behalf of the county by the head of the county delegation, or in the absence of the head of the delegation, by another member of the delegation designated by the head of the delegation;
(b) the person who votes on behalf of a delegation shall determine whether or not to vote in support of, or against the matter, after consulting the other members of the delegation; and
(c) the matter is carried only if it is supported by a majority of all the delegations.

Kisii County Assembly Standing Orders
Standing Order 65
(1) On election, all Members of the County Assembly who were registered as voters in a particular Ward shall collectively constitute a single delegation for purposes of paragraph (2) and the Member of County Assembly elected under Article 177 (1) (a) of the Constitution shall be the head of the delegation.
(2) Except as otherwise provided in the Constitution, in any matter in the County Assembly affecting wards –

(a) each Ward delegation shall have one vote to be cast on behalf of the Ward by the head of the Ward delegation or, in the absence of the head of the delegation, by another member of the delegation designated by the head of the delegation; and
(b) the person who votes on behalf of a delegation shall determine whether or not to vote in support or against the matter, after consulting the head of the delegation; and
(c) the matter is carried only if it is supported by a majority of all delegations.
(d) when the county assembly is to vote on any matter, the Speaker shall rule on whether the matter affect, or does not affect Wards.
(e) The Speaker’s ruling under paragraph (d) shall be made after conclusion of debate on the matter before the question is put.
(f) When the County Assembly votes on a matter that does not affect Wards, each Member of County Assembly has one vote.

Held:

  1. Courts ought to provide a purposive interpretation which advanced the rule of law and contributed to good governance. The Circular made it clear that the Commission on Revenue Allocation had made recommendations to the Senate regarding the recommended county government recurrent expenditure ceilings for the year2018/19. It was clear from the Circular that the Senate had processed the recommendations. The Circular did not say that Members of County Assemblies had to be paid some specified allowances and also be given some specified resources. The Circular provided;
    1. a clarification about the items which each county government ought to incorporate on account of recurrent expenditures in their respective budgets;
    2. the ceilings in respect to each item; and
    3. The Circular made it clear that the responsibility of incorporating the recommendations into relevant pieces of legislation, remained with the legislative arm of Government.
  2. It would be completely wrong for the court to make an order based on an assumption or a presumption. Therefore, even assuming that funds had been made available to the County Assembly of Kisii, at some point of time relevant to the case, the court would be utterly irresponsible to conclude that such funds remained within the respondents’ custody.
  3. Courts were not forums for academic or any other theoretical discourse. When the applicants first moved the court they also filed a certificate of urgency in which they said, inter alia, that they continued to suffer discrimination and financial hardship due to differentiated treatment. In other words, the petitioners were facing real discrimination and differential treatment. They could not turn around and tell the court that it was immaterial whether or not their concerns existed as a matter of fact.
  4. Discrimination would be deemed to be present when one group of persons was being treated differently from another group. In the instant case, the nominated MCAs would have to prove that whilst the elected MCAs were being given allowances in accordance with the Circular, the nominated MCAs were being denied the same kind of allowances, simply on account of the fact that they were nominated MCAs.
  5. The petitioners had failed to make out a case that would warrant the issuance of an order compelling the respondent to immediately comply with the Circular. However, in the event that the County Assembly started operationalizing the Circular, the same should be applied to all Members of the County Assembly.
  6. From a procedural point of view the amendment which was passed in accordance with the Standing Orders of the County Assembly on March 5, 2018, was so passed in accordance with the Standing Orders of the County Assembly. That was because both the elected and the nominated MCAs cast their votes on the motion which gave rise to the amendments.
  7. Pursuant to that standing order 65 of the Standing Orders there was no distinction between elected and nominated MCAs. Provided that they were present in the County Assembly, each MCA would be entitled to cast his or her vote on a question which had arisen in the County Assembly, and which required a decision to be made on it.
  8. The amendment in issue appeared to mirror, to a large extent, the provisions of article 123 of the Constitution of Kenya, 2010 (Constitution) on decisions of Senate. Pursuant to article 123 of the Constitution, it was only the elected Senators who were eligible to be the head of their respective county delegations. Kenyans decided that the 16 nominated women senators, the 2 who represented the youth, and the 2 who represented persons with disabilities were not eligible to head the county delegations. In the same vein, the County Assembly decided that in respect of matters affecting wards, it was only elected MCAs who were eligible to be the heads of the ward delegations.
  9. Whereas the Constitution expressly spelt out the issue appertaining to Senators, it was silent on the issue which the County Assembly had legislated upon, as regarded MCAs. The Constitution could not possibly address all manner of issues. However, by enacting an amendment to the Standing Orders in a manner that mirrored that which was in article 123 of the Constitution, the County Assembly had acted in a manner that was consistent with the Constitution. However, it could not be denied that the said enactment created a distinction between elected MCAs and nominated MCAs. Those who were elected were eligible to become heads of ward delegations, whilst those who were nominated were not eligible.
  10. Apart from the fact that the amendment mirrored article 123 of the Constitution, the respondents had not satisfied the court that the decision that permanently precluded nominated MCAs from becoming heads of ward delegations was in conformity with article 10(2)(b) of the Constitution. Pursuant to article 10 of the Constitution, the national values and principles of governance bound all State organs, State officers, public officers and all persons whenever they, inter alia, enacted, applied or interpreted any law. When the amended standing order provided a pre-determined position, that barred nominated MCAs from ever becoming the heads of the ward delegations that was inconsistent with the national values and principles of equality and non-discrimination.
  11. The nominated MCAS represented women, youth and persons with disabilities, those categories of persons did not hail from some special wards. They were brothers and sisters of Kenyans who lived within the wards that constituted each county. Therefore, there could not be matters which could be categorized as affecting only wards, to the exclusion of the persons represented by the nominated MCAs.
  12. The amendment which provided that each ward delegation would have one vote applied to all MCAs; it was not applicable only to the petitioners. Therefore, that aspect of the amendment was neither discriminatory against nor prejudicial to the rights of the petitioners.
  13. The head of the ward delegation was obliged to consult the MCAs in his or her ward to ascertain whether or not to vote in support of or against the matter. Therefore, the petitioners would have an opportunity to influence the vote to be cast by the delegation which they were a part of.

Petition partly allowed; each party to bear own costs.

Order
The amendment to standing order 65 of the Kisii County Assembly Standing Orders which sought to limit the petitioners from being eligible to be head of wards delegations was discriminatory against them and was therefore unconstitutional.

CONSTITUTIONAL LAW

An accused person has no right of appeal against a ruling of the trial court on having a case to answer in a criminal trial

Martin Makhakha v Republic [2019] eKLR
Criminal Appeal No. 48 of 2017
Court of Appeal at Eldoret
E M Githinji, H M Okwengu & J Mohammed, JJA
October 17, 2019.
Reported by Kakai Toili

Download the Decision

Constitutional Law – fundamental rights and freedoms – rights of accused persons – rights of accused persons during criminal trials - explaining of an accused person’s rights at the close of the prosecution case - what were the rights to be explained to an accused person at the close of the prosecution case and what was their role – Criminal Procedure Code, section 211
Appeals – criminal appeals - matters to be determined – matters of law - what were the elements of determining a matter of law in an appeal - whether an accused person could appeal against a ruling of a trial court on having a case to answer - Criminal Procedure Code, sections 361 and 347

Brief facts:
The appellant was charged at the trial court with three counts of assault and one charge of creating a disturbance in a manner likely to cause a breach of the peace. The appellant pleaded not guilty to the charges. The trial court in its ruling found that the prosecution had established a prima facie case against the appellant who should be placed on his defence. Aggrieved by that decision, the appellant filed an appeal to the High Court on the grounds that the evidence before the trial court did not warrant him to be put on his defence among others. The High Court agreed with the trial court that the appellant had a case to answer and found no reason to interfere with the trial court’s decision. Aggrieved by the High Court’s decision, the appellant filed the instant appeal.

Issue:

  1. Whether an accused person could appeal against a ruling of a trial court on having a case to answer.
  2. What were the elements of determining a matter of law in a criminal appeal?
  3. What were the rights to be explained to an accused person at the close of the prosecution case and what was their role? Read More...

Held:

  1. By dint of section 361 of the Criminal Procedure Code (CPC), the mandate of the court was to consider only issues of law. The 3 elements of the phrase matters of law were characterized as follows;
    1. the technical element: involving the interpretation of a constitutional or statutory provision;
    2. the practical element: involving the application of the law to a set of facts or evidence on record; and
    3. the evidentiary element: involving the evaluation of the conclusions of a trial court on the basis of the evidence on record.
  2. The basis of putting an accused on his defence was founded on the prosecution establishing a prima facie case. It could not be easy to define what was meant by a prima facie case, but at least it had to mean one on which a reasonable tribunal, properly directing its mind to the law and the evidence could convict if no explanation was offered by the defence.
  3. The standard of establishing a case beyond reasonable doubt after the close of the prosecution’s case was not required in determining whether or not the accused had a case to answer. That could only be done after an accused had been called to tender a defence. Only then could the court critically examine the evidence tendered under a microscope. Without delving into the merits of the case, there was substantial evidence to warrant the accused being placed on his defence.
  4. Section 211 of the CPC required that the rights of an accused person be explained to him at the close of the prosecution case and when he was being put on his defence. Those rights were;
    1. the right of remaining silent and saying nothing;
    2. the right to make an unsworn statement from the dock in which event the accused was not liable to cross examination by the prosecution;
    3. the right to give sworn evidence from the witness box in which event the accused became liable to cross examination by the prosecution if the prosecution wished; and
    4. the right to call witnesses if the accused so wished.
  5. The rights under section 211 of the CPC were crucial rights of an accused person in a trial that were meant to ensure fair trial. When they had been explained to an accused, he responded by electing to proceed as he wished. His response ought to be taken down and ought to appear on the court record. The accused was then called upon to proceed in the way he had elected.
  6. The record indicated that the appellant was represented by counsel who filed written submissions at the close of the prosecution case maintaining that the appellant had no case to answer. Subsequently the trial court delivered his ruling and on the same day the appellant indicated his intention to appeal against the said ruling. There was no failure of justice, as the trial court did not proceed with the defence but ordered that since the appellant had filed an appeal, the court would await the outcome of the appeal. The appellant’s complaint that his rights under section 211 of the CPC were violated lacked merit as it was premature for the court to comply with section 211, the defence hearing having been held in abeyance to await his appeal.
  7. A determination that there was a case to answer did not and could not mean that the court would inevitably convict. It was simply an opportunity for the accused to give his side of the story and poke holes in the prosecution’s case. Under section 347(1)(a) of the CPC, a right of appeal from a subordinate court to the High Court only arose where an accused person had been convicted. Therefore, the appellant had no right of appeal against the interlocutory ruling made by the trial court. His appeal before the High Court was therefore incompetent.

Appeal dismissed; Kimilili Criminal Case No 581 of 2012 against the appellant to proceed at the trial court before the same magistrate or any other magistrate under section 200 of the CPC.

CONSTITUTIONAL LAW

Judicial review applications on tax assessments should not be instituted before exhausting the dispute resolution mechanisms under the Tax Appeals Tribunal Act.

Republic v Commissioner of Domestic Taxes Exparte Sony Holdings Limited [2019] eKLR
Misc. Civil Application No. 363 of 2018
High Court at Nairobi
J M Mativo, J
November 15, 2019
Reported By Kakai Toili

Download the Decision

Constitutional Law – fundamental rights and freedoms – right to fair administrative action vis a vis right to fair hearing - what was the distinction between the right to fair administrative action and the right to a fair hearing – Constitution of Kenya, 2010, articles 47 and 50
Constitutional Law – constitutional petitions – capacity – issues capable of being addressed in a constitutional petition - what constituted a constitutional question that was capable of being addressed in a constitutional petition
Legitimate Expectation – application of the doctrine of legitimate expectation – requirements - what were the steps taken by courts in adjudicating legitimate expectation claims
Judicial Review – judicial review applications – institution of judicial review applications – where other dispute resolution mechanisms were available - judicial review vis a vis statutory dispute resolution mechanisms - where the Commissioner of Domestic Tax made a decision reviewing an applicant’s tax assessments upwards – where the Tax Appeals Tribunal Act established the Tax Appeals Tribunal to hear appeals against any tax decision by the Commissioner of Domestic Tax - what were the circumstances in which a party could institute a judicial review application before exhausting dispute resolution mechanisms provided for by an Act - Tax Appeals Tribunal Act, section 3; Fair Administrative Actions Act, 2015, sections 2 and 9
Civil Practice and Procedure – pleadings – form and role - what was the role of pleadings in civil proceedings and what was to be contained in them - Civil Procedure Rules, 2010, Order 15 rule 2
Tax Law – payment of tax – exemption from payment of tax – powers of the Cabinet Secretary of Finance to exempt payment of tax – delegation of - whether the Cabinet Secretary for Finance could delegate to the Commissioner for Domestic Tax the power to exempt payment of taxes – Income Tax Act, section 35 (7); Kenya Revenue Authority Act, section 5
Judicial Review - reliefs – declaratory reliefs – what were the tests for granting declaratory reliefs
Administrative Law - administrative or quasi-judicial decisions – challenging of administrative or quasi-judicial decisions - grounds for challenging administrative or quasi-judicial decisions – legality and reasonableness - factors to consider in determining whether a decision was illegal - what were the guiding factors on what constituted unreasonableness

Brief facts:
The applicant averred that terrorists attacked the Westgate Mall and in response to the attack, security forces launched an operation, which lasted almost two months. In the process, the Mall was destroyed rendering it desolate, thus depriving the applicant its chief revenue earner and putting it in a tax loss position. The applicant alleged that the respondent subjected the applicant to numerous and arbitrary assessments, tax audits and private rulings over the period of destruction and reconstruction of the Mall. The applicant further alleged that despite the respondent conducting several audits and issuing private rulings confirming the tax treatment of receipts and expenses, thus creating a legitimate expectation on the applicant’s part, the respondent suddenly changed its position.
The applicant claimed that it applied in writing to the Cabinet Secretary for Finance (CS) for exemption from withholding tax on rental income and copied the letter to the respondent. The applicant also claimed that the respondent purported to conduct a review of the applicant’s tax matters for a period of over a year, and raised an additional assessment for tax. The applicant claimed that upon objecting to the assessment, the respondent amended the assessment and confirmed assessments of tax payable by the applicant in relation to corporation tax. The applicant challenged the respondent’s allegation that reconstruction was not tax deductible and the respondent issued a private ruling confirming that the applicant could claim commercial building allowance on the reconstruction costs upon construction if it provided roads, water, sewers and other social infrastructure. The applicant filed the instant application and sought among others an order of certiorari to quash the respondent’s tax assessment.

Issues:

  1. What constituted a constitutional question that was capable of being addressed in a constitutional petition?
  2. What was the role of pleadings in civil proceedings and what was to be contained in them?
  3. What were the extra ordinary circumstances under section 9(2) of the Fair Administrative Action Act in which a party could institute a judicial review application before exhausting available statutory dispute resolution mechanisms?
  4. Whether the Cabinet Secretary for Finance could delegate to the Commissioner for Domestic Tax the power to exempt payment of taxes.
  5. What were the requirements and the steps to be taken by courts in the application and adjudication of the doctrine of legitimate expectation?
  6. What was the distinction between the right to a fair administrative action and the right to a fair hearing?
  7. What were the tests for granting declaratory reliefs?
  8. What were the grounds for challenging an administrative or quasi-judicial decision?
    1. What were the factors to consider in determining whether a decision was illegal?
    2. What were the guiding factors on what constituted unreasonableness? Read More...

Relevant Provisions of the Law
Fair Administrative Actions Act
Section 7
(2) A court or tribunal under subsection (1) may review an administrative action or decision, if-
i. the administrative action or decision is not rationally connected to-

a) the purpose for which it was taken;
b) the purpose of the empowering provision;
c) the information before the administrator; or
d) the reasons given for it by the administrator.”

Section 9
(4) Notwithstanding subsection (3), the High Court or a subordinate Court may, in exceptional circumstances and on application by the applicant, exempt such person from the obligation to exhaust any remedy if the court considers such exemption to be in the interest of justice.

Tax Appeals Tribunal Act
Section 12
A person who disputes the decision of the Commissioner on any matter arising under the provisions of any tax law may, subject to the provisions of the relevant tax law, upon giving notice in writing to the Commissioner, appeal to the Tribunal; Provided that such person shall before appealing, pay a non-refundable fee of twenty thousand shillings.

Civil Procedure Rules, 2010
Order 15 Rule 2
The court may frame the issues from all or any of the following materials—

(a)allegations made on oath by the parties, or by any persons present on their behalf, or made by the advocates of such parties;
(b)allegations made in the pleading or in answers to interrogatories delivered in the suit;
(c)the contents of documents produced by either party.

Held:

  1. The question of exhaustion of administrative remedies arose when a litigant, aggrieved by an agency’s action, sought judicial review of that action without pursuing available remedies before the agency itself. Where there was a clear procedure for redress of any particular grievance prescribed by the Constitution or an Act of Parliament, that procedure should be strictly followed. Section 3 of the Tax Appeals Tribunal Act (TAT Act) established the Tax Appeals Tribunal to hear appeals filed against any tax decision made by the respondent. The words to note in that provision were “any tax decision”. The decision under challenge in the proceedings was a tax decision within the said definition.
  2. The pleadings and prayers sought in the instant case revealed an attack on tax assessments. However, the arguments propounded were geared to depict a litigant aggrieved by the respondent’s role under sections 13 and 35(7) of the Income Tax Act (ITA). Simply put, the said argument was carefully crafted to invalidate a tax decision, which was an appealable decision before the Tax Appeals Tribunal (TAT). Differently stated, a lot of energy, ink and paper went into the said argument, but the prayers sought to invalidate tax assessments, which were tax decisions.
  3. The function of a pleading in civil proceedings was to alert the other party to the case they needed to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court could conduct a fair trial. The cardinal rule was that a pleading had to state all the material facts to establish a reasonable cause of action (or defence). The expression ‘material facts’ was not synonymous with providing all the circumstances. Material facts were only those relied on to establish the essential elements of the cause of action.
  4. Issues in a suit arose from pleadings or evidence both oral and documentary. However, issues in a suit only arose when a material proposition of fact or law was affirmed by the one party and denied by the other. The need for pleadings to be as precise as possible could not be doubted. There was no direct prayer in the pleadings seeking to quash the CS’s decision or to compel him to act. If the main grievance was the application for exemption, such a prayer was necessary. If the main grievance was alleged violation of fundamental rights, the applicant ought to seek a direct relief addressing the said grievance. On the contrary, all the prayers sought have one common thread, they attacked or sought to invalidate tax assessments.
  5. Despite the applicant attempting to present the issue before the court as constitutional questions, that argument fell on three grounds;
    1. The prayers sought presented a clear tax dispute, which was an appealable decision. Put simply, the following were examples of constituting constitutional issues;
      1. the constitutionality of provisions within an Act of Parliament;
      2. the interpretation of legislation; and
      3. the application of legislation.
      At the heart of the cases within each type or classification was an analysis of the same thing, the constitutionally entrenched fundamental rights. Therefore, the classifications were not discreet and there were inevitably overlaps, but the classifications were nonetheless useful theoretical tools to organize an analysis of the nature of constitutional matters arising from the cases before the court.
    2. The argument that the respondent usurped power conferred upon the CS was attractive. However, the resultant decision was a tax decision, which was appealable as, provided under the tax laws. The same argument could be presented before the TAT. Differently put, the issues fell within the province of a tax dispute. It did not warrant the court to determine whether the tax decision was inconsistent with the Constitution. Courts abhorred the practice of parties converting every issue in to a constitutional question and filing suits disguised as constitutional petitions or judicial review applications when in fact they did not fall anywhere close to violation to constitutional rights.
    3. Section 9(2) of the Fair Administrative Actions Act (FAA Act) provided that the High Court or a subordinate court under section 9(1) should not review an administrative action or decision under the Act unless the mechanisms including internal mechanisms for appeal or review and all remedies available under any other written law were first exhausted. Also relevant was section 9(3) which provided that the High Court or a subordinate court should, if it was not satisfied that the remedies referred to in section 9(2) had been exhausted, direct that an applicant should first exhaust such remedy before instituting proceedings under section 9(1).
  6. It was the duty of courts to try to get at the real intention of the Constitution or legislation by carefully attending to the whole scope of the Constitution or a statute. The word shall when used in a statutory provision imported a form of command or mandate. It was not permissive, it was mandatory. The word shall in its ordinary meaning was a word of command which was normally given a compulsory meaning as it was intended to denote obligation. Ordinarily the words shall and must were mandatory and the word may was directory. A proper construction of section 9(2) and (3) of the FAAA Act led to the conclusion that they were couched in mandatory terms. The only way out was the exception provided by section 9(4).
  7. The impugned decision constituted an administrative action as defined in section 2 of the FAA Act. Therefore, an internal remedy had to be exhausted prior to judicial review, unless the ex parte applicant could show exceptional circumstances to exempt him from that requirement. There was no definition of exceptional circumstances in the FAA Act, but the court interpreted exceptional circumstances to mean circumstances that were out of the ordinary and that rendered it inappropriate for the court to require an applicant first to pursue the available internal remedies. The circumstances had to, in other words, be such as to require the immediate intervention of the court rather than to resort to the applicable internal remedy. The applicant did not distinguish its case from the cases provided for in the tax laws.
  8. The internal remedy would be effective; all that the applicant needed was to prosecute its case before the TAT. The powers of the TAT and the remedies it could grant were clearly defined under the law, it could resolve the dispute. It had not been shown that pursuing the dispute at the TAT would be futile. There was no argument that the appellate tribunal had developed a rigid policy, which rendered the requirement for exhaustion futile.
  9. A reading of section 9(4) of the FAA Act was that the applicant had to first apply to the court and demonstrate the existence of exceptional circumstances. No competent application was presented before the court to determine the question whether or not the applicant demonstrated exceptional circumstances; nor were there any exceptional circumstances in the circumstances of the instant case.
  10. No convincing argument was advanced that the internal remedy was not effective. There was no convincing suggestion that the remedy under the TAT Act did not offer a prospect of success. There was no serious argument that the remedy under the TAT Act could not be objectively implemented, taking into account relevant principles and values of administrative justice present in the law. There was no convincing suggestion that the remedy could not be pursued, without any obstruction, whether systemic or arising from unwarranted administrative conduct. There was no convincing suggestion, even in the slightest manner that the internal remedy was inadequate and incapable of redressing the complaint.
  11. The court had an inherent jurisdiction to protect itself from abuse or to see that its process was not abused. An abuse was done when one made an excessive or improper use of a thing or to employ such thing in a manner contrary to the natural legal rules for its use. The situations that could give rise to an abuse of court process were indeed in exhaustive, it involves situations where the process of court had not been or resorted to fairly, properly, honestly to the detriment of the other party. However, abuse of court process arose in the following situations:
    1. Instituting a multiplicity of actions on the same subject matter, against the same opponent, on the same issues or multiplicity of actions on the same matter between the same parties even where there existed a right to begin the action.
    2. Instituting different actions between the same parties simultaneously in different court even though on different grounds.
    3. Where two similar processes were used in respect of the exercise of the same right.
    4. Where an application for adjournment was sought by a party to an action to bring another application to court for leave to raise issue of fact already decided by court below.
    5. Where there was no iota of law supporting a court process or where it was premised on recklessness. The abuse in that instance lay in the inconvenience and inequalities involved in the aims and purposes of the action.
    6. Where a party had adopted the system of forum-shopping in the enforcement of a conceived right.
    7. Where an appellant filed an application at the trial court in respect of a matter which was already subject of an earlier application by the respondent at the Court of Appeal.
    8. Where two actions were commenced, the second asking for a relief which could have been obtained in the first.
  12. The respondent in his replying affidavit failed to annex copies of the alleged previous proceedings, thus depriving the court the basis upon which it could properly address its mind to the annexures, arrive at the right conclusion. On that ground alone, the respondent’s counsel’s argument that the suit was an abuse of court process failed.
  13. Public bodies, no matter how well intentioned, could only do what the law empowered them to do. That was the essence of the principle of legality, the bedrock of Kenya’s constitutional dispensation, which was enshrined in the Constitution. It followed that for the impugned decisions to be allowed to stand, it had to be demonstrated that the decision was grounded on law. As such, the respondents’ actions had to conform to the doctrine of legality. Put differently, a failure to exercise that power where the exigencies of a particular case required it, would amount to undermining the legality principle, which, was inextricably linked to the rule of law.
  14. A contextual or purposive reading of a statute had to remain faithful to the actual wording of the statute. As it stood, that exposition was generally accepted, but it had to be said that context was everything in law, and obviously one needed to examine the particular statute and all the facts that gave rise to it. A contextual interpretation of a statute, therefore, had to be sufficiently clear to accord with the rule of law. In the instant case, what had to be avoided was a reading that would necessitate the delegation of powers if the enabling statute would not allow that delegation. The need for proper delegation was based on the doctrine of legality. All public power had to be sourced in law.
  15. The delegation or authorization of the power conferred on the CS under section 35(7) of the ITA, had to flow from the law. The power to delegate had to exist prior to and independently of the manner in which the CS exercised his powers. A sub-delegation of the CS’s powers could only be justified if it was expressly provided for in the statute or if it was reasonably necessary or, to put it differently, if effect could not be given to the statute as it stood unless the provision sought to be implied was read into the statute.
  16. Under section 35(7) of the ITA, the CS could, by notice in the Gazette, exempt from the provisions of section 35(3) of the ITA any payment or class of payments made by any person or class of persons resident or having a permanent establishment in Kenya. Section 35(7) used the word ‘may’ thereby conferring discretion upon the CS. Only the public authority to which it had been committed had to in general, exercise a discretionary power. When a power had been conferred to a person in circumstances indicating that trust was being placed in his individual judgment and discretion, he had to exercise that power personally unless he had been expressly empowered to delegate it to another.
  17. In general, a CS was not obliged to bring his own mind to bear upon a matter entrusted to him by statute but could act through a duly authorised officer of his department. The officer’s authority needed not be conferred upon him by the CS personally; it could be conveyed generally and informally by the officer’s hierarchical superiors in accordance with departmental practice. However, some matters could be of such importance that the CS was legally required to address himself to them personally.
  18. Pursuant to section 5 of the Kenya Revenue Authority Act (KRA Act), the Kenya Revenue Authority (KRA) under the general supervision of the CS, was an agency of the Government for the collection and receipt of all revenue. A reading of section 5(2) left no doubt that the Commissioner General of KRA (Commissioner) was statutorily mandated to advise the CS on all matters relating to the administration of and collection of revenue under the written laws or the specified provisions of the written laws set out in the First Schedule. It was also clear that the provision conferred powers to the Commissioner to perform such other functions in relation to revenue as the CS could direct.
  19. The CS’s power was not improperly delegated. The statute expressly provided the mandate. Further, where the statute conferred mandate as in the instant case, it would not be necessary for the CS to issue a gazette notice delegating the function. There would be no need to gazette that, which was expressly, provided in a statute. The attempt to invoke the provisions of the Interpretation of General Provisions Act requiring gazettement of such delegated powers did not apply in the instant function. That was because the statute expressly conferred the powers, even in absence of the express statutory mandate.
  20. It would be unlawful for the CS or the respondent to pass a decision exempting tax payment where there had not been a full and complete compliance with the law. The law obligated the CS to undertake due diligence before granting the exemption, hence, the wisdom behind the requirement for advise under section 5 of the KRA Act. The law vested the mandate of advising the CS upon the respondent. To do or suggest otherwise was to engage in an illegality and such a decision would be tainted by an error of the law.
  21. Under section 7 of the FAA Act, a decision or administrative action could be judicially reviewed if, among other things, if the decision was taken in bad faith or arbitrarily or capriciously, or the decision was not rational or was otherwise unconstitutional or unlawful. Fundamental to the legitimacy of public decision-making was the principle that official decisions should not be infected with improper motives such as fraud or dishonesty, malice or personal self-interest. Those motives, which had the effect of distorting or unfairly biasing the decision-maker’s approach to the subject of the decision, automatically caused the decision to be taken for an improper purpose and thus took it outside the permissible parameters of the power.
  22. A power was exercised fraudulently if its repository intended for an improper purpose, for example dishonestly, to achieve an object other than that which he claimed to be seeking. The intention could be to promote another public interest or private interests. A power was exercised maliciously if its repository was motivated by personal animosity towards those who were directly affected by its exercise.
  23. Even though bad faith had not been given a precise definition, it had been frequently associated with actions involving malice, fraud, collusion, illegal conduct, dishonesty, abuse of power, discrimination, unreasonable conduct, ill-motivated conduct or procedural unfairness. A decision maker should not seek to achieve a purpose other than the purpose for which the power to make the decision had been granted by Parliament. Bad faith could be inferred where there was a deliberate breach of due process or where the decision maker appeared to have been influenced by irrelevant considerations.
  24. In order to satisfy the requirement that an apprehension of bias had to be reasonable in the circumstances, the reasonable, objective, informed and fair-minded person entered the fray. The test was: whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the decision maker had not or would not bring an impartial mind to bear on the adjudication of the case, that was a mind open to persuasion by the evidence and submissions of counsel.
  25. The greatest defence to allegations of bias was that the act had to have been performed in good faith. The act complained of had to have been done in the performance or intended performance of a duty or authority under the enabling Act or by-law passed under it. The words good faith had to be read in the context of the act. When one spoke of good faith in the performance of a duty or statutory authority, one had to look to the nature of the duty or statutory authority to determine what was reasonable and what was not. That contextual approach could lead to very subjective judgments. If there was clear evidence of an intention to act illegally or outside the scope of authority, dishonestly or with malice, in other words, a blatantly dishonest exercise of power, then a party could not rely on the good faith defence. However, to lose the immunity of good faith involved more than negligence or an error in judgment. If there was an honest attempt to give effect to the law, the good faith defence should prevail.
  26. The applicant had not demonstrated that the motive of the decision was in doubt. The material before the court did not suggest bad faith or a reasonable possibility of ill motive or bad faith in making the impugned decision. Bad faith was a serious allegation which attracted a heavy burden of proof. The applicant had not demonstrated that the taxes were not due. On the contrary, the material shows that the taxes were due, hence, the request for exemption. Imputing bad faith just because a litigant was unhappy with a decision did meet the tests laid down for bad faith.
  27. A procedural legitimate expectation rested on the presumption that a public authority would follow a certain procedure in advance of a decision being taken. In adjudicating legitimate expectation claims, the court followed a two-step approach;
    1. it asked whether the administrator’s actions created a reasonable expectation in the mind of the aggrieved party; and
    2. if the answer to that question was in affirmative, the second question was whether that expectation was legitimate. If the answer to the second question was equally affirmative, then the court would hold the administrator to the representation, and enforce the legitimate expectation.
  28. The basic premise underlying the protection of legitimate expectations seemed to be the promotion of legal certainty. Individuals should be able to rely on Government actions and policies and shape their lives and planning on such representations. The trust engendered by such reliance was said to be central to the concept of the rule of law. The requirements for the existence of legitimate expectation included;
    1. that there had to be a representation which was clear, unambiguous and devoid of relevant qualification;
    2. that the expectation had to be reasonable in the sense that a reasonable person would act upon it;
    3. that the expectation had to have been induced by the decision-maker; and
    4. that it had to have been lawful for the decision-maker to make such representation.
    If such an expectation existed it would be incumbent on the administrator to respect it. If the court found that a legitimate expectation did in fact exist, it would ordinarily invalidate the administrative action and refer the matter back to the decision-maker to deal with it in a procedurally fair manner.
  29. Statutory words overrode an expectation howsoever founded. Thus, a decision maker could not be required to act against clear provisions of a statute just to meet ones expectations otherwise his decision would be out rightly illegal and a violation of the principle of legality, a key principle in rule of law. There could not be legitimate expectation against the clear provisions of a statute.
  30. The respondent’s private ruling in respect of commercial building allowance, was subject to the transactions’ compliance with the law. It was in conformity with paragraph 6A of the Second schedule to the ITA. Whether what was constructed by the applicant was a public road falling outside the applicant’s premises and not for the exclusive use by the applicant in its business was a contested issue of fact, which warranted oral evidence to prove. Judicial review did not deal with contested issues of fact. The law excluded public roads.
  31. Whether the applicant had a legitimate expectation that the respondent would not issue an incomplete, defective and deceptive private ruling deliberately concealing other applicable and mandatory conditions, with the intention of inducing the applicant to act on the said ruling to its detriment was an attack on the merit of the ruling. The applicant was inviting the court to assume appellate jurisdiction, which was outside the purview of judicial review jurisdiction. The applicant had not satisfied the tests for the doctrine of legitimate expectation to apply in the circumstances of the instant case.
  32. Reasonableness, as a ground for the review of an administrative action was dealt with in section 7(2)(k) of the FAA Act. A court or tribunal had the power to review an administrative action if the exercise of the power or the performance of the function authorised by the empowering provision, in pursuance of which the administrative action was purportedly taken, was so unreasonable that no reasonable person could have so exercised the power or performed the function.
  33. Review by a court of the reasonableness of decision made by another repository of power was concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process but also with whether the decision fell within a range of possible, acceptable outcomes, which were defensible with respect to the facts and law. Put differently, whether the decision fell outside the range of possible acceptable outcomes applying the same set of facts and the law. The following propositions could offer guidance on what constituted unreasonableness;
    1. wednesbury unreasonableness was the reflex of the implied legislative intention that statutory powers be exercised reasonably;
    2. that ground of review would be made out when the court concluded that the decision fell outside the area of decisional freedom, which that legislative assumption authorized, that was, outside the range within which reasonable minds could differ; and
    3. the test of unreasonableness was whether the decision was reasonably open to the decision-maker in the circumstances of the case. To say that the decision was not reasonably open was the same as saying that no reasonable decision maker could have made it.
  34. If a statute which conferred a decision-making power was silent on the topic of reasonableness, that statute should be construed so that it was an essential condition of the exercise of the powers that it be exercised reasonably. The legal standard of reasonableness had to be the standard indicated by the true construction of the statute. It was necessary to construe the statute because the question to which the standard of reasonableness was addressed was whether the statutory power had been abused.
  35. Legal unreasonableness comprised of any or all of the following, namely;
    1. specific errors of relevancy or purpose;
    2. reasoning illogically or irrationally;
    3. reaching a decision which lacked an evident and intelligible justification such that an inference of unreasonableness could be drawn, even where a particular error in reasoning could not be identified; or
    4. giving disproportionate or excessive weight — in the sense of more than was reasonably necessary — to some factors and insufficient weight to others.
    If there was an evident, transparent and intelligible justification for the decision or if the decision was within the area of decisional freedom of the decision-maker, it would be an error for the court to overturn the decision simply on the basis that it would have decided the matter differently.
  36. Rationality, as a ground for the review of an administrative action was dealt with in section 7(2)(i) of FAA Act. The question whether a decision was rational related to the purpose for which the power was given and called for an objective enquiry. Otherwise a decision that, viewed objectively, was in fact irrational, could pass muster simply because the person who took it mistakenly and in good faith believed it to be rational. Such a conclusion would place form above substance and undermine an important constitutional principle.
  37. A decision which failed to give proper weight to relevant factors could also be challenged as being unreasonable. If an administrative or quasi-judicial body took into account any reason for its decision which was bad, or irrelevant, then the whole decision, even if there were other good reasons for it, was vitiated.
  38. The court’s role remained strictly supervisory. It was concerned with determining whether there had been a lawful exercise of power having regard, in particular, to the terms, scope and purpose of the statute conferring the power. There were no traits of irrationality, procedural impropriety or unreasonableness in the impugned tax assessments. There was nothing to show that a reasonable person or tribunal, faced with the same set of facts and the law would have arrived at a different conclusion. In other words, applying the tests of unreasonableness and irrationality, the applicant had not demonstrated that the decision was tainted with unreasonableness or irrationality. In any event the reasons cited largely touched on the merits of the decision as opposed to grounds for review.
  39. The common law relating to judicial review of administrative action based on procedural impropriety had undergone a rather remarkable transformation. Courts, using the language of natural justice and fairness, had brought about a situation in which a broad range of statutory authorities were subject to the observance of at least a modicum of procedural decency. That a decision was against natural justice did not mean merely that it was against evidence or wrong in law; it meant that the decision was such that the person appealing had not had his case properly considered by the decision maker.
  40. The Constitution recognized a duty to accord a person procedural fairness when a decision was made that affected a person’s rights, interests or legitimate expectations. Procedural fairness contemplated by article 47 of the Constitution and the FAA Act demanded a right to be heard before a decision affecting ones right was made.
  41. The applicability of principles of natural justice was not dependent upon any statutory provision. The principle had to be mandatorily applied irrespective of the fact as to whether there was any such statutory provision or not.
  42. The standards of fairness were not immutable. The principles of fairness were not to be applied by rote identically in every situation. What fairness demanded was dependent on the context of the decision, and this was to be taken into account in all its aspects. Accordingly, the courts looked at all the circumstances of the case to determine how the demands of fairness should be met.
  43. The right to a fair administrative action under article 47 of the Constitution was a distinct right from the right to a fair hearing under article 50(1)(2) of the Constitution. Fair administrative action broadly referred to administrative justice in public administration. It was concerned mainly with control of the exercise of administrative powers by State organs and statutory bodies in the execution of constitutional duties and statutory duties guided by constitutional principles and policy considerations and that the right to a fair administrative action, though a fundamental right was contextual and flexible in its application and could be limited by law. Fair hearing under article 50(1) applied in proceedings before a court or independent and impartial tribunals or bodies.
  44. There was nothing to show that the applicant was not provided with the opportunity to avail its records before the impugned decision was made. The applicant was made aware of the tax assessments, an objection decision was rendered as the law provided and the applicant was made aware of the decision. There was no merit in the argument that the applicant’s right to a fair hearing were violated.
  45. The tests for granting a declaratory relief were;
    1. the court had to first be satisfied that the applicant was a person interested in an existing, future or contingent right or obligation; and
    2. if so, the court had to decide whether the case was a proper one for the exercise of its discretion.
    The first leg of the enquiry involved establishing the existence of the necessary condition precedent for the exercise of the court’s discretion. An applicant for the declaratory relief satisfied that requirement if he succeeded in establishing that he had an interest in an existing, future or contingent right or obligation. Only if the court was satisfied did it proceed to the second leg of the enquiry.
  46. The circumstances of the instant case did not warrant the granting of the declaratory reliefs sought. That was because the respondent’s actions were grounded on the enabling tax statutes.
  47. Certiorari was a discretionary remedy, which a court could refuse to grant even when the requisite grounds for it existed. The court had to weigh one thing against another to see whether or not the remedy was the most efficacious in the circumstances obtaining. The discretion of the court being a judicial one had to be exercised on the basis of evidence and sound legal principles.
  48. The discretionary nature of the judicial review remedies sought in the application meant that even if a court found a public body had acted wrongly, it did not have to grant any remedy. In the instant case, the applicant ought to have subjected itself dispute resolution mechanism provided under the TAT Act and the TPA instead of invoking the judicial review jurisdiction of the court.
  49. The writ of prohibition arrested the proceedings of any tribunal, corporation, board or person, when such proceedings were without or in excess of the jurisdiction of such tribunal, corporation, board or person. A prohibiting order was similar to a quashing order in that it prevented a tribunal or authority from acting beyond the scope of its powers. The key difference was that a prohibiting order acted prospectively by telling an authority not to do something in contemplation. However, the illegality of the impugned decision had not been established nor had it been established that the respondent acted illegally or in excess of its powers nor had the impugned decision been shown to be illegal, irrational or a nullity. The applicant could not seek an order of prohibition to enable it not to pay lawfully due taxes. An order of prohibition could not issue against clear provisions of the law.
  50. When a court was asked to invalidate a decision on grounds of error of law, its task was simply to satisfy itself whether the decision was arrived at based upon relevant evidence, and, whether, the decision maker acted in an arbitrary manner and reached a finding of fact not supported by any evidence. It also entailed examining whether the decision maker misdirected himself and directed its attention to the wrong issue by misconstruing a statute. Additionally, it involved examining whether the decision maker stepped beyond the legal limits or acted in an arbitrary manner by reaching an unreasonable conclusion based on the material before it.
  51. The most basic rules of administrative law were first that decision makers could exercise only those powers, which were conferred on them by law and, second, that they could exercise those powers only after compliance with such procedural prerequisites as existed. So long as administrators complied with those two rules, their decisions were safe. From the perspective of administrators and statutory bodies, that fundamental principle generally required that the exercise of powers of administrators and statutory bodies had to strictly comply with the law both substantively and procedurally. Therefore, the legality of an administrative decision or decisions rendered by tribunals or public bodies could be judicially challenged on grounds that the administrative decision did not comply with those basic requirements of legality. Thus, the applicant had a duty to demonstrate those basic requirements.
  52. An administrative or quasi-judicial decision could only be challenged for illegality, irrationality and procedural impropriety. An administrative decision was flawed if it was illegal. A decision was illegal if it;
    1. contravened or exceeded the terms of the power which authorized the making of the decision;
    2. pursued an objective other than that for which the power to make the decision was conferred;
    3. was not authorized by any power; and
    4. contravened or failed to implement a public duty.

    The applicant had failed to present grounds to demonstrate that the impugned conduct of decision was legally frail.

Application dismissed with costs to the respondent.

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The Kenya Law Team

Where Legal Information is Public Knowledge.

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