Weekly Newsletter 026/2020



Kenya Law

Weekly Newsletter


The difference between the High Court’s statutory criminal revisional jurisdiction and the High Court’s constitutional supervisory jurisdiction.

Director of Public Prosecutions v Perry Mansukh Kansagara & 8 others
Criminal Revision No 4 of 2020
High Court at Naivasha
R Mwongo, J
April 9, 2020
Reported by Beryl Ikamari
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Jurisdiction - jurisdiction of the High Court - revisional jurisdiction of the High Court under the Criminal Procedure Code - scope and applicability - whether the High Court's revisional jurisdiction could allow it to set aside a decision of a subordinate court to acquit accused persons on grounds of non-appearance by the prosecution - Criminal Procedure Code (cap 75), section 364(2)(d).
Jurisdiction - jurisdiction of the High Court - revisional jurisdiction of the High Court under the Criminal Procedure Code and constitutional supervisory jurisdiction of the High Court - differences between the High Court's revisional jurisdiction and constitutional supervisory jurisdiction - whether the High Court's revisional jurisdiction and constitutional supervisory jurisdiction were not equivalents and they did not allow the High Court exercise the same scope of power - Constitution of Kenya 2010, articles 165(6) and 165(7); Criminal Procedure Code (cap 75), section 364(2)(d).
Jurisdiction - jurisdiction of the High Court - constitutional supervisory jurisdiction of the High Court - scope and applicability - whether the High Court's constitutional supervisory jurisdiction could allow it to set aside a decision of a subordinate court to acquit accused persons on grounds of non-appearance by the prosecution - Constitution of Kenya 2010, articles 165(6) and 165(7).
Criminal Procedure - non-appearance of parties - non-appearance at the hearing by the complainant - Director of Public Prosecutions (DPP) as a complainant - where the specific prosecution counsel handling a criminal case was absent but a different prosecution counsel was present - whether the court was entitled to dismiss the criminal case due to non-appearance - Criminal Procedure Code (cap 75), section 202 and 203; Office of the Director of Public Prosecutions Act, No 2 of 2013, section 22(2).
Statutes - interpretation of statutory provisions - dismissal of a criminal case under section 210 of the Criminal Procedure Code - whether non-appearance by the DPP on the date fixed for hearing would be a ground for the dismissal of a criminal case under section 210 of the Criminal Procedure Code - Criminal Procedure Code (cap 75), section 210.

Brief facts:
On May 9, 2018, the Patel Dam collapsed and caused destructive flooding in the nearby downstream villages. It led to 48 known deaths of villagers and other damage. The tragedy was of great public interest. Arising from the incident, various accused persons were identified and criminal proceedings were instituted by the Director of Public Prosecutions (DPP) in MCR No 977 of 2018 R v Perry Mansukh Kasangara & 8 others. In that criminal case, all the accused persons faced 48 counts of manslaughter contrary to section 202 as read with section 205 of the Penal Code, the 3rd to 9th accused persons faced charges of official neglect of duty contrary to section 28 as read with section 36 of the Penal Code and the 1st, 2nd ,6th and 7th accused persons, faced charges of failing to prepare an Environmental Impact Assessment Report contrary to section 138(b) of the Environmental Management and Conservation Act.
The suit was dismissed due to failure by the prosecution to avail itself to prosecute the case on the set hearing date. The DPP wrote a letter in which it applied for a criminal revision and asked the court to satisfy itself as to the correctness, legality or propriety of the trial court’s finding on dismissal of the suit. Initially, the application had its grounding in sections 362, 363 and 365 of the Criminal Procedure Code but an additional letter widened the legal basis of the application to include articles 2, 3, 10, 26, 27, 45, 47,48, 50, 159, and 165 of the Constitution, 2010.


Issues:
  1. Whether the revisional jurisdiction of the High Court as provided for under the Criminal Procedure Code allowed the court to reverse a decision of a subordinate court to acquit accused persons.
  2. What was the difference between revisional jurisdiction under the Criminal Procedure Code and constitutional supervisory jurisdiction?
  3. Whether the High Court could exercise its constitutional supervisory jurisdiction to set aside a decision of a subordinate court to acquit accused persons.
  4. Under what circumstances would the court be permitted to dismiss a criminal case due to non-appearance by the complainant?
  5. Under what circumstances could a suit be dismissed under section 210 of the Criminal Procedure Code?
Held:
  1. The revisional jurisdiction of the High Court as exercised under sections 362 to 366 of the Criminal Procedure Code had limits. Under those provisions, the High Court was barred particularly under section 364(2)(d) of the Criminal Procedure Code from exercising power to revise an acquittal and the only remedy against an acquittal was an appeal. However, the supervisory jurisdiction provided for under the Constitution, particularly under articles 165(6) and 165(7) entitled the High Court to call up any proceedings of any subordinate court, tribunal, authority or body.
  2. Questions about the court's jurisdiction were important. A court with no jurisdiction had to down its tools.
  3. Revisional jurisdiction as described in section 362 of the Criminal Procedure Code entitled the High Court call for and examine the record of any criminal proceedings before any subordinate court for the purpose of satisfying itself as to the correctness, legality, or propriety of any finding, sentence, or order recorded or passed, and as to the regularity of any proceedings of such subordinate court.
  4. Historically, the important characteristics of revisionary jurisdiction were the following:-
    1. it was founded on statute (originally the Indian Criminal Procedure Code);
    2. it granted power for the court to call for and examine the record of proceedings;
    3. it permitted the High Court to call up only proceedings that were before an inferior criminal court;
    4. under section 435(1) of the Indian Criminal Procedure Code, it was a power available to a Sessions Judge and also a District Magistrate, or any Sub-divisional Magistrate empowered by the Local Government;
    5. it allowed a Session Judge or District Magistrate, if, on examining the record of any case under section 435 or otherwise, he considered that such case was triable exclusively by the Court of Session and that an accused person had been improperly discharged, to commit such person for trial provided that the accused was availed an opportunity of showing cause why committal should not occur (section 436) (a) of the Indian Criminal Procedure Code);
    6. it empowered the High Court or the Sessions Judge, on examining any record under section 435, to direct the District Magistrate or other subordinate magistrate court to make further inquiry (section 437 of the Indian Criminal Procedure Code);
    7. an inferior court’s proceeding could be called up for revision by the High Court on its own initiative, or it could be reported to the court for orders or it could otherwise come or be brought to the court’s knowledge (section 439(1) of the Indian Criminal Procedure Code);
    8. the court of revision could enhance a sentence (section 439(1) of the Indian Criminal Procedure Code);
    9. the court of revision could not make an order to the prejudice of the accused unless he had an opportunity of being heard (section 439(2) of the Indian Criminal Procedure Code);
    10. the High Court exercising revision power was not authorized to convert a finding of acquittal into one of conviction (section 439(4) of the Indian Criminal Procedure Code); and,
    11. no party had any right to be heard, either personally or by pleader, before any court when exercising its powers of revision provided that the court, if it thought fit when exercising such powers, could hear any party (section 440 of the Indian Criminal Procedure Code).
  5. Most of the characteristics of revisional jurisdiction were retained in the subsequent amendments to the Indian Criminal Procedure Code. The first Kenyan statute on criminal procedure was the 1930 Civil Procedure Ordinance, Act No XI of 1930, adopted but also made substantive amendments to the Indian Criminal Procedure Code. The revisional jurisdiction provisions were encapsulated in sections 347-352 of the 1930 Ordinance. In the 1948 Criminal Procedure Ordinance, which was re-named Chapter 27 Laws of Kenya, the provisions on revisional jurisdiction were retained and contained in sections 361-366 of that Ordinance. The content of the revisional jurisdiction provisions did not change substantially.
  6. Under section 349(1)(b) of the Indian Criminal Procedure Code Ordinance, 1930, the Supreme Court was prohibited from revising an order of acquittal. That prohibition was retained in the 1948 Criminal Procedure Code Ordinance in section 363(1)(b). Under section 364(1)(b) of the existing Criminal Procedure Code (Cap 75,) the prohibition was retained and it disallowed the High Court from entertaining a revision of an order of acquittal. Therefore, the court had no revisionary jurisdiction to interfere with the trial court's order which expressly acquitted the accused persons pursuant to section 210 of the Criminal Procedure Code.
  7. In interpreting the Constitution, the historical perspective was an important consideration. Therefore, it was necessary to consider the historical context of constitutional supervisory jurisdiction.
  8. Since 1987, the High Court in one form or another held unlimited original jurisdiction in civil and criminal matters. The East Africa Colony Order-in-Council 1897 and order 15 of the EA Order in Council 1902 provided for that. Similar provisions included order 14 of the Kenya Colony Order - In - Council, 1921. However, the said order 14 did not specifically avail the Supreme Court any supervisory jurisdiction over subordinate courts.
  9. For the first time in 1963 supervisory jurisdiction was specifically provided for. Section 171 of the 1963 Independence Order–In–Council (the independence Constitution) gave the Supreme Court jurisdiction to supervise any civil or criminal proceedings before any subordinate court.
  10. The provisions on supervisory jurisdiction were retained under section 65(2) and 65(3) of the 1969 Constitution. The only difference was that the Supreme Court was renamed as the High Court. The Chief Justice was to make rules of procedure for the exercise of that jurisdiction but none were made until the year 2006. Before then, several High Court decisions entailed refusals to exercise supervisory jurisdiction because there were no rules of procedure.
  11. Supervisory Jurisdiction was not merely an appellate or revisional type of jurisdiction as envisaged under sections 362-367 of the Criminal Procedure Code, but a distinct jurisdiction to supervise subordinate courts and tribunals in exercise of the court’s authority to make any order or give any direction it considered appropriate to ensure the fair administration of justice in the terms prescribed in article 165(7) of the Constitution.
  12. The exercise of supervisory jurisdiction under the Constitution of Kenya 2010, did not require the promulgation of procedural rules by the Chief Justice. There was no intent for supervisory jurisdiction to be subjected to rules enacted by the Chief Justice. The absence of such rules could not be a ground to pre-empt the High Court from invoking its express constitutional mandate and obligation to exercise its supervisory jurisdiction. However, it would be prudent for orderliness in the exercise of supervisory jurisdiction for legislative guidance or rules from the Chief Justice under section 10 of the Judicature Act, to be available.
  13. Supervisory jurisdiction and revisional jurisdiction were different. That difference was often overlooked in decisions that gave the perception that the High Court's supervisory jurisdiction was operationalized by statutory provisions on revisional jurisdiction. It was apparent that the perception was borrowed from other common law jurisdictions that appeared to consider revisional jurisdiction as somewhat equivalent to supervisory jurisdiction.
  14. Supervisory jurisdiction was unique as it was not limited to criminal proceedings and the scope of the High Court's power was to make any order or give any direction it considered appropriate to ensure the fair administration of justice.
  15. The ultimate effect of the High Court (Organisation and Administration) Act and Rules was that the supervisory jurisdiction of the High Court was distinct from other jurisdiction conferred on the court. Thus, the statutory revisional jurisdiction conferred on the court by the Criminal Procedure Code could not be equated to supervisory jurisdiction. The High Court's supervisory jurisdiction was capable of being exercised beyond the narrow constraints of the provisions of statute including the Criminal Procedure Code.
  16. There were circumstances under which the High Court could call up the record of proceedings of a criminal case and intervene in exercise of constitutional supervisory jurisdiction. They included the following situations:-
    1. where there were special or exceptional circumstances that could not be addressed through the statutory revisional powers of the court without undue expense or delay;
    2. where there was clear and irrefutable evidence of a violation of the rights of a person whose representation was permitted in law;
    3. where the public interest element of the case was so substantial that the court would be deemed as abetting an injustice if it did not intervene to correct the situation; and
    4. in any event, the overriding principle in all cases was that the court had to act only with the objective of ensuring the fair administration of justice.
  17. The safeguards related to the exercise of constitutional supervisory jurisdiction included the following:-
    1. a balance had to be struck in the exercise of constitutional supervisory jurisdiction to ensure there was no appearance that its object was to micromanage the trial court’s independence in the conduct and management of its proceedings;
    2. ideally, constitutional supervisory jurisdiction should be exercised only after the parties had been heard on the subject matter in question;
    3. supervisory jurisdiction should not be used where the option of revision was appropriate or applicable;
    4. supervisory jurisdiction should not be used as a shortcut for an appeal where circumstances for appeal clearly pertained and were more appropriate; and,
    5. supervisory jurisdiction should be exercised to achieve the promotion of the public interest and public confidence in the administration of justice.
  18. The were five hearing dates fixed for the main trial. The first hearing date was July 27, 2019. On July 27, 2019, the matter was adjourned to September 2, 2019 on grounds that there were negotiations about an amicable settlement. That meant that the prosecution was to be ready to prosecute on September 2, 2019. On the same grounds relating to negotiations, the hearing was adjourned to December 3, 5 and 6, 2019. On December 3, 2019, the prosecution counsel in the matter was said to be indisposed. The trial court ruled that it would give directions that no party was at liberty to file any application as watching brief for the complainants or victims in the matter without first seeking leave of court. Considering the general sequence of events, the trial court's ruling was generally accurate.
  19. On December 3, 2019, the trial court indicated that it would give a ruling on December 5, 2019. The pending issues before the court were therefore related to the pending ruling or directions with respect to the victims' application dated August 26, 2019, the question of the absence of the DPP and the fresh victims' application dated November 28, 2019. It was in the ruling of February 3, 2020 that the trial court exercised its discretion to close the prosecution case and acquit the accused under section 210 of the Criminal Procedure Code.
  20. The ruling of February 3, 2020 was said in a ruling made on February 5, 2020 to be one that made determinations on the applications raised on behalf of victims in the matter but it did not make such determinations. Victim rights should not be ignored or overlooked to the point where the victims had no voice whatsoever in the criminal case prior to the acquittal of the accused persons. The overall effect of the omissions to resolve the pending victim applications was that the victims’ constitutional right to participate in the criminal trial had been violated and with the acquittal of the accused, the victims were left entirely high and dry.
  21. Under section 202 of the Criminal Procedure Code, a court could dismiss a suit for non-appearance of the complainant. The DPP was the complainant and a prosecution counsel was present on December 3, 2019 when the matter was set for hearing. However, that counsel was not the specific counsel in the conduct of the matter. Nonetheless, the DPP was present by delegated authority pursuant to section 22(2) Office of the Director of Public Prosecutions Act, No 2, 2013. Section 202 of the Criminal Procedure Code that would allow for dismissal of the case for non-appearance was not applicable to the matter due to the presence of the prosecution counsel.
  22. If a prosecution counsel appeared, the court would be entitled to invoke section 203 of the Criminal Procedure Code to deem the state as properly represented by delegation and the matter as having proper appearance of parties and it would proceed with the present prosecution counsel going on record.
  23. Section 210 of the Criminal Procedure Code was applicable where the prosecution had called witnesses and also after the close of the prosecution's case. The record did not show that any witnesses were called for in court or that the prosecution counsel had made representation in that regard or that the prosecution had declined to commence its case. Therefore, under the specific circumstances, there were serious doubts as to whether the court was entitled to invoke section 210 of the Criminal Procedure Code to dismiss the case.
  24. Despite having allowed for the substitution of the 9th accused person with another accused person who then took plea on July 9, 2018, the court failed to make reference to that person who had taken plea in its ruling of February 3, 2020. That omission was an inadvertent error which had the serious legal implication of leaving the 9th accused person with criminal proceedings to face.
  25. Public interest and the promotion of public confidence in the administration of justice required the court to consider the interests of the victims of the burst dam. Judicial authority had to be exercised under the principle that justice should be administered without undue regard to procedural technicalities and so that the purposes and principles of the Constitution were protected and promoted.
Application allowed.
Orders:-
  1. The decision of the trial court acquitting the 1st to 8th respondents was declared void and set aside.
  2. A retrial was ordered before a magistrate other than Hon K Bidali in respect of all the accused persons that had taken plea. For the avoidance of doubt, nothing in the judgment prevented the DPP from enjoining other persons for trial.
  3. The lower court file was to be placed before the Chief Magistrate for re-allocation for hearing of the case forthwith at the earliest opportunity taking into account the scaled-down activities of the court and the current national constraints on citizen movement due to the covid pandemic.
  4. Bail and bond terms in force in respect of the accused persons immediately prior to the ruling dated February 3, 2020, were reinstated.
  5. The court noted that the DPP had affirmed his readiness for trial as far back as July 25, 2019, the substantive trial had to be commenced without undue delay taking into account the scaled-down activities of courts nationwide, and in such manner as to comply with the emergency proclamations made regarding movement and workings of the courts as a result of the covid pandemic.
  6. In light of the fact that three sessions of dates fixed for trial had previously been adjourned or aborted, the hearing was to, as far as possible proceed on a day-to-day basis with any adjournment not exceeding thirty clear days pursuant to section 205(1), and subject thereto to section 283 of the Criminal Procedure Code.
  7. The pending applications by or on behalf of victims, namely, a notice of motion dated August 26, 2019, and filed on August 27, 2019, and the victims' notice of motion filed on November 28, 2019, were to be heard and determined prior to the commencement of the hearing of the substantive trial.
  8. The trial court was to manage victim participation applications and engagement with all due expedition, and in such a manner that such applications and the participation of victims were not jeopardized and the continuance of the substantive trial was not jeopardized.
Kenya Law
Case Updates Issue 026/2020
Case Summaries

LABOUR LAW Teachers Service Commission is vicariously liable for the sexual misconduct of its employees in the course of employment.

Teachers Service Commission v WJ & 5 others [2020] eKLR
Civil Appeal No. 309 of 2015
Court of Appeal at Nairobi
R Nambuye, MK Koome & F Sichale, JJA
April 24, 2020
Reported by Kakai Toili

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Labour Law – employment – employer-employee relationship – vicarious liability of an employer for the acts of an employee - where a teacher committed sexual misconduct in the course of employment - whether the Teachers Service Commission could be vicariously liable for the sexual misconduct of its employee - Teachers Service Commission Act (repealed), section 7(2)(c).
Constitutional Law – constitutional commissions – Teachers Service Commission (TSC) – role – where there were claims of sexual misconduct by its employee – where TSC issued circulars prohibiting sexual conduct between teachers and students – where the circulars were only issued to the teachers - whether it was necessary to issue the circulars to both students and teachers - Teachers Service Commission Act (repealed) section 4(2).
Constitutional Law – fundamental rights and freedoms – enforcement of fundamental rights and freedoms – rights of children – right to education – provision of a safe learning environment - what did the provision of a safe learning environment for children entail.
Jurisdiction – jurisdiction of the Court of Appeal – jurisdiction to interfere with the High Court’s exercise of discretion to award damages - what were the circumstances in which the Court of Appeal could interfere with the High Court’s exercise of discretion.

Brief facts:
The 1st and 2nd respondents (minors) filed a claim at the High Court against the appellant (TSC) and alleged that the 3rd respondent, who was the deputy head teacher and the minors’ Kiswahili teacher, had violated the minors. It was claimed that TSC had failed to discharge its constitutional and statutory mandate which included the exercise of disciplinary power over teachers who breached the provisions of the Code of Regulations for teachers. TSC claimed that it received information that the 3rd respondent had breached the provisions of the Code of Regulations for Teachers by sexually abusing the minors on various occasions and that it carried out disciplinary proceedings against the 3rd respondent, and as a result of the proceedings, it dismissed the 3rd respondent.
The High Court held that the allegations of sexual abuse had been proved on a balance of probabilities and that the minors had suffered a violation of their rights to dignity, health and education. The High Court also held that there was insufficient enforcement of the TSC circular prohibiting sexual contact between teachers and students, and the Code of Ethics and the policies were not properly disseminated in schools. The High Court further held that there was failure by the State to provide legal remedies and support for children who were victims of sexual abuse by teachers and that the TSC, the State and 4th respondents were vicariously liable for the wrongful acts of the 3rd respondent. Aggrieved by that decision, the appellant filed the instant appeal.

Issues:

  1. Whether the Teachers Service Commission could be held vicariously liable for the sexual misconduct of its employee in the course of employment.
    1. Whether it was necessary to issue circulars prohibiting sexual conduct between teachers and students to both students and teachers.
    2. What did the provision of a safe learning environment for children entail?
  2. What was the role of the Teachers Service Commission where there were claims of sexual misconduct by a teacher?
  3. What were the circumstances in which the Court of Appeal could interfere with the High Court’s exercise of discretion to award damages? Read More..

Relevant provisions of the law
Teachers Service Commission Act (repealed)
Section 4(2)
It shall also be the duty of the Commission to keep under review the standards of education, training and fitness to teach appropriate to persons entering the teachers service, and the supply of teachers, and to tender advice to the Minister from time to time on the aforesaid matters and on such other matters as may be referred to it by the Minister.

Section 7(2(c)
A person shall be entitled to be registered as a teacher if— in the case of a person whom the Commission wishes to employ….his education, fitness to teach and experience are such as, in the opinion of the Commission, to warrant his registration.

Held:

  1. As the first appellate court, it was the court’s duty to re-evaluate the evidence before the High Court, and ascertain if the trial court came to the correct conclusion in respect to both facts and the law. Even though the 3rd respondent had been acquitted of the criminal charges by the Magistrate’s Court, the minors’ statements and those of their guardians, with respect to the events that took place on July 4, 2010 in the 3rd respondents’ house, and in the classroom on July 30, 2010 were consistent enough to draw a conclusion of culpability based on the test of balance of probabilities. Furthermore, the TSC’s disciplinary action involving interdiction, investigation, dismissal and de-registration sufficiently showed that the 3rd respondent, a deputy head teacher in charge of the minors at the time, committed acts amounting to sexual assault against the minors, or conducted himself inappropriately as a teacher, so much so that his employer found it justifiable to not only dismiss him from employment but also to deregister him as a teacher. The 3rd respondent did not challenge either his dismissal or his deregistration.
  2. Many teachers were serial offenders who abused students in one school and were often transferred to other schools, where the abuse continued. That meant that;
    1. there was insufficient enforcement of the circular and the code of ethics and the steps taken by the State and TSC were in many respects limited and ineffectual; and,
    2. there was a failure in providing support and remedies for children who could be subjected to sexual violence by their teachers.
  3. The minors were vulnerable victims who were under the authority and power of the 3rd respondent. TSC as the employer of the 3rd respondent did not adduce evidence to show how the regulations were cascaded and taught to the students who needed the information even much more than the teachers. It was not enough to issue circulars to teachers or schools while leaving out students. Students were the potential victims who needed the information more than even the teachers.
  4. Bearing in mind the prevalence of the problem of sexual abuse by teachers, the State and TSC had a higher duty to exercise reasonable care so as not to expose children to dangerous elements within the school. Providing a safe learning environment did not only refer to infrastructure, but also ensuring the dignity of the child was not violated more so by their caregivers. By parity of reasoning, if the minors for example had sustained physical injuries, say by an accident and while in the school premises, which accident was caused by failure of the school, the school and the State would also be vicariously liable.
  5. There were circulars and policies that prohibited sexual interaction between a teacher and a child, but that did not mean the mere existence of policy in itself empowered the child victims to question the legitimacy of the teacher’s sexual requests, nor did it show how a child could make a report of the incidences of sexual abuse. For example, TSC had a duty to ensure that the policy was put in the notice board of every classroom and for the head teacher to sign a form confirming that both teachers and students had been explained the content of the policy.
  6. There had to be present, a reporting procedure such that if a student was sexually abused, the matter could be reported to an impartial office where the privacy of the child was observed and the matter was followed through the justice system. The 3rd respondent was in charge of the school’s discipline and counseling and one wondered where the minors were to report. The measures employed by the TSC and the State to provide a safe learning environment for children were insufficient and ineffective and the High Court’s judgment should have been used to strengthen and operationalize the policies.
  7. The primary function of the ‘course of employment’ requirementwas to ensure that the employee’s tort was sufficiently linked to the employer’s enterprise, so as to justify the imposition of liability on the employer. It thus limited the responsibility of the employer to acts committed by the employee, acting in their employment capacity, and excluded those related to personal or private life. Although the incidences that took place on July 4, 2010 took place in the 3rd respondent’s house, the opportunity to lure the minors to his house occurred in school where he exercised power and authority over them. The minors were students who were supposed to obey their teacher. The abusive acts continued from the house as they were followed by other instances of the sexual abuse, such as the one that occurred on July 30, 2010, which happened in a classroom.
  8. A teacher’s work was to offer protection to his students and not to take advantage of their tender age and abuse them. An act would be deemed to have been committed during the course of employment if there was a close connection between the unauthorized conduct and the employment. There was a close connection between the conduct of the 3rd respondent as a teacher when he abused his position as a teacher and abused his students.
  9. The level of risk faced by the minors in the instant appeal was elevated due to the prevalence of sexual abuse in Kenyan schools which was a matter of public notoriety as conceded by TSC itself worthy of judicial notice. The minors’ case was not an isolated incident and TSC was well aware that a real danger existed where innocent school children were routinely subjected to abuse by their teachers who stood in a position of loca parentis with the children. The appellant’s submission that there were claims that the 3rd respondent had a history of sexual misconduct which led to his transfer to the school where the alleged acts occurred did not help matters. As a matter of public policy, TSC had a duty to investigate such allegations before transferring the 3rd respondent so as not to endanger the minors as it came to pass. Once the employee had been hired, TSC had a legal duty to supervise the employee and his conduct while at work in order to shelter 3rd parties more so children from risk. That was a statutory duty under section 4(2) of the repealed Teachers Service Commission Act.
  10. Under the theory of negligent retention (also known as negligent supervision), an employer was held liable for retaining an employee who it knew or should have known was not fit for the employment position. The theory placed an affirmative investigative duty on the employer to remedy improper activity when they knew or ought to have known of its existence within the workplace. When applying negligent retention theory, courts focused on whether the employer had notice concerning past sexual improprieties and/or what measures, if any, the employer took to reprimand or dismiss the abusing employee. Notice could be in the form of actual notice or constructive notice of facts which should have suggested that the employee posed a special threat. Actual notice was that which was given directly and personally while constructive notice was information or knowledge of a fact imputed to a person who had a duty to inquire into it.
  11. Through a report by a child therapist who documented how when the school community learnt of the sexual abuse of the minors, some teachers repeatedly mocked the minors while defending the 3rd respondent, suggested that there was an existing culture of tolerance to sexual abuse of students which thrived in that school. The report also went further to show that TSC’s Code of Regulations was not in use in that school; there was failure to ensure the teachers were properly instructed not to sexually abuse children and likewise children were not empowered on how to report their teachers when subjected to abuse.
  12. Liability in tort depended on reasonable foreseeability of loss and not merely on the directness or otherwise of the consequences. TSC took on the risk that its employee would commit a legal wrong especially when he was transferred to the school, and failure to warn the school and students of the 3rd respondent’s weakness. TSC was accordingly liable for the creation of such risk as there were no credible mechanisms that were put in place to mitigate the wrong. The main function of vicarious liability was to provide compensation to those vulnerable persons who, through no fault of their own, were exposed to the inherent risks of the employer’s business.
  13. As innocent victims, the minors were entitled to compensation for having been subjected to such humiliation, shame and pain that could have a lifelong effect on them. It was inconceivable how the minors in their tender years were made to carry that kind of burden of shame due to selfishness of a caregiver. Compensation and award of damages was an exercise of discretion by the High Court and could be interfered with if the Court of Appeal was convinced that the High Court acted upon some wrong principles of law, or that the amount awarded was extremely high or low. The appellant did not demonstrate that the award was too high. The minors were traumatized and stigmatized perhaps for the rest of their lives. The award of damages could not be interfered with.
  14. The argument that it was TSC’s duty to implement its own policies and guidelines to curb sexual misconduct by its employees and that in the circumstances, the unlawful acts were in no way linked to the State could not pass the test of the 5th respondent’s mandate under article 156(6) of the Constitution which included to promote, protect and uphold the rule of law and defend the public interest. The instant case raised very serious matters of public interest and protection and promotion of the rule of law. Moreover, international law obligated states to take all appropriate legislative, administrative, social and educational measures to protect children from all forms of physical, mental abuse including sexual abuse.
  15. The African Charter on the Rights and Welfare of the Child and of which Kenya was a signatory urged member states to take specific measures including exercising due diligence and increasing awareness about sexual abuse. The Committee on the Rights of the Child recognized the prevention of violence against children to be of paramount importance. That was a non-delegable duty and could not be delegated to any agency including the TSC. An absolute duty, as opposed to duties of reasonable care, gave rise to an obligation on the defendant to ensure that reasonable care was taken. By contrast to the doctrine of vicarious liability, it was the direct relationship between the State and the children, as citizens that established the duty in that context, and then the conduct of the TSC that was used to establish its breach. A finding of failure by the TSC to exercise reasonable care, of itself, lead to a finding of breach of the State’s duty.
  16. The appellant had a statutory duty to ensure the minors had a safe learning environment which it failed to do. The absence of provisions for remedy for breach of that statutory duty was no bar to stop the minors from filing a claim of damages under the tort of negligence and the Constitution.

Appeal and cross- appeal dismissed with costs to the 1st and 2nd respondents.

CONSTITUTIONAL LAW

The Judicial Service Commission has no mandate to discipline judges under article 168 of the Constitution.

Apollo Mboya v Judicial Service Commission & another; Justice Kalpana Rawal & 4 others (Interested Parties)
Petition No 204 of 2016
High Court at Nairobi
W Korir, J
May 14, 2020
Reported by Beryl Ikamari

Download the Decision

Constitutional Law - Judiciary - removal of a judge from office - role of the Judicial Service Commission in the removal of a judge from office under article 168 of the Constitution - whether in a situation where allegations made against a judge did not meet the threshold for grounds relating to removal of a judge from office, the Judicial Service Commission, could opt to engage in disciplinary measures, such as admonishing a judge - Constitution of Kenya 2010, article 168.
Constitutional Law - fundamental rights and freedoms - rights to fair administrative action and a fair hearing - whether a party that was given an opportunity to give a written representations but was not heard orally, before an administrative decision against that party was made, had rights to fair administrative action and fair hearing violated.
Constitutional Law - timelines - unreasonable delay - where reasons for delay included a heavy workload - whether a delay of six months by the Judicial Service Commission in rendering a decision on a petition for the removal of judges from office was unreasonable.
Constitutional Law - interpretation of constitutional provisions - role of the Judicial Service Commission in the removal of a judge from office under article 168 of the Constitution - the decision of the Judicial Service Commission on whether to forward a petition for removal of a judge from office to the President for the setting up of a tribunal to consider the same - whether such a decision could be partial in the sense that some issues raised in the petition, could be reserved for determination at a future date - Constitution of Kenya 2010, article 168.
Constitutional Law - interpretation of constitutional provisions - role of the Judicial Service Commission in the removal of a judge from office under article 168 of the Constitution - whether the Judicial Service Commission, in handling complaints of misconduct made against a judge could undertake a merit review of a judgment, ruling or order in order to determine whether a judge had engaged in misconduct - Constitution of Kenya 2010, article 168.

Brief facts:
The petitioner filed a petition with the Judicial Service Commission for the removal of the five interested parties from office as judges of the Supreme Court. The petitioner alleged that in response to a written statement from the JSC on a retirement age of 70 years for all judges, 3rd, 4th and 5th interested parties had intimated, via a letter dated September 24, 2015, that they had withdrawn their services. The main allegation therefore related to some form of a strike at the Supreme Court. The JSC considered the petition and sought and obtained written responses from the interested parties. In the course of the proceedings, the 1st and 2nd interested parties left the Judiciary, for different reasons, after having served as judges.
After considering whether a ground for removal of a judge from office under article 168(1) of the Constitution existed, the JSC decided to embark on a disciplinary measure of admonishing the judges. It found that there had been misconduct but not that there had been gross misconduct. The JSC did not forward the petition to the President for the setting up of a tribunal. It chose to discipline the judges by admonishing them.
The petitioner complained that it took six months for the JSC to render a decision and the decision only related to part of his complaint. He said that the delay was unreasonable. He added that the JSC should have forwarded his petition to the President under article 168(4) of the Constitution as that was what the Constitution required. According to the petitioner, the decision to admonish the judges was unconstitutional.
The 5th interested party also filed a petition (Petition 218 of 2016) that was consolidated with that of the petitioner. She alleged that her rights to fair administrative action and a fair hearing had been violated. She explained that she was not afforded an opportunity to be heard orally before the JSC made its decision. She said that there was an unreasonable delay of six months in rendering a partial decision on the complaint made against her. The JSC was yet to give its full decision on the complaints made against her. She further contended that the JSC could not admonish her as it had no mandate to do so. According to the 5th interested party, it was the tribunal that would be appointed by the President that had the mandate to undertake disciplinary action.
The 5th interested party also alleged that the lack of procedural rules relating to the exercise of the JSC’s mandate, meant that the process of considering allegations before the JSC was open to arbitrariness and unfairness. She asked the court to grant orders for the promulgation of regulations as required under section 47 of the Judicial Service Act.

Issues:

  1. What was the role of the JSC in the process provided for the removal of a judge from office under article 168 of the Constitution?
  2. Whether a party that was given an opportunity to give written representations but was not heard orally, before an administrative decision against that party was made, had rights to fair administrative action and fair hearing violated.
  3. Whether a delay of six months made by the Judicial Service Commission in rendering a decision about a complaint relating to the possible removal of a judge from office, was an unreasonable delay.
  4. Whether it was lawful for the Judicial Service Commission to render a partial decision, while leaving some issues for determination at a future date, in a petition for the removal of certain judges from office.
  5. Whether the Judicial Service Commission, in handling complaints of misconduct made against judges could undertake a merit review of a judgment, ruling or order in order to determine whether a judge had engaged in misconduct.
  6. Whether under article 168 of the Constitution, after considering a petition for the removal of a judge and finding that the required threshold for removal had not been met, the Judicial Service Commission could discipline a judge for misconduct not amounting to gross misconduct. Read More...

Held:

  1. Article 168 of the Constitution provided for the process of the removal of a judge from office. The role of the JSC was to initiate or receive a complaint against a judge, consider whether it disclosed a ground for removal as set out in article 168(1) of the Constitution and if it did, to forward the petition to the President for purposes of forming a tribunal to hear and determine the petition on merit.
  2. In order for the rules of natural justice and in particular the right to a fair hearing to be deemed to have been complied with, three conditions ought to have been met; the right to be heard by an unbiased tribunal, the right to have notice of the charges, and the right to be heard in answer to those charges.
  3. The allegations made against the 5th interested party were very clear. Even though she asked for further and better particulars, she understood the complaint. She responded to the complaints via a replying affidavit. It was therefore apparent that she was confronted with charges that she understood and was given an opportunity to respond to them and she responded.
  4. The JSC wrote to the 5th interested party informing her of a special committee appointed to consider the petition against her and that she would be notified of a hearing date. However, she was not informed of the hearing date but instead she received a letter through which she was admonished for the alleged misconduct.
  5. Although the JSC was a master of its own procedure, the nature of allegations raised against the interested parties required an oral hearing. Even though an oral hearing would have been the better option under the circumstances, the JSC had the discretion of considering the petition and the written responses in reaching a determination as it did. It could not therefore be accused of failing to comply with the principles of natural justice.
  6. The 4th and 5th interested parties alleged that the committee that handled her matter was biased but did not elaborate on the issue in their submissions. There was scanty evidence on the issue of bias and it was difficult for the court to make an adverse finding against the JSC on grounds of alleged bias.
  7. The JSC complied with the minimum requirements of the fair administrative action. The threshold of article 47 of the Constitution and the Fair Administrative Action Act, 2015 was met by the JSC in respect of the administrative proceedings against the interested parties.
  8. Where no particular time for performing an act was prescribed by the Constitution, the act should be done without unreasonable delay. The question of what was reasonable varied from case to case. Each case had its own circumstances including the seriousness of the issues, the number of witnesses, and the conduct of the parties and their advocates. Considering the reasons given by the JSC as to why it took the period of time it took to determine the petition, there was no unreasonable delay in the determining of the matter.
  9. The JSC explained that the reason for failure to give a decision on all the issues raised in the complaint was that those issues were sub judice. Splitting the petition and leaving some issues undetermined could only mean that the issues not addressed had no merit. The JSC had no authority to leave some issues for a later determination. The affected judges were entitled to know their fate once and for all.
  10. Whenever a party was aggrieved by the decision of a judge or a judicial officer, the way to go was to file an appeal or seek review. The JSC had no power to conduct a merit review of a judgment or ruling in order to determine whether there was misconduct on the part of a judge or judicial officer. However, it could not be said that judgments were entirely no-go-zones for the JSC. Nevertheless, the JSC should avoid complaints which invite it to analyze a judgment or ruling in order to determine alleged incompetence of the judge or judicial officer who authored the decision. It was therefore wrong for the JSC to take charge of the Salat case in an attempt to determine if the opinion of the majority or the minority was right.
  11. Allowing the JSC to meddle with the judicial discretion of judges and judicial officers would severely impact on the independence of the Judiciary. Nonetheless, the JSC could use judgments to find that grounds of removal under article 168(1) had been established. If a judge or judicial officer heard the case of his spouse, child, mother, brother, sister, relative or friend against another party, the JSC could legitimately use the judgment or ruling to show that the judge or judicial officer sat in a case in which he or she had a personal interest.
  12. The role of the JSC under article 168 of the Constitution was clear. The JSC had no power to “try” and “convict” a judge. Such power was reserved for the tribunal formed by the President where the JSC found that the threshold for recommending the removal of a judge from office had been met. Where the JSC found no evidence that met the threshold in article 168(1) of the Constitution it had to down its tools.
  13. The JSC had no powers to discipline judges under the provisions of article 168 of the Constitution. It was not feasible that the Constitution could have granted the JSC disciplinary powers without providing an avenue for appeal to judges aggrieved by its decisions. The makers of the Constitution of Kenya, 2010 never contemplated any other procedure for dealing with the failings of a judge apart from the one provided by article 168 of the Constitution.
  14. By admonishing the 5th interested party, the JSC crossed its constitutional and statutory boundaries which limited its powers to determining the merits of the complaint against a judge for the sole purpose of determining whether the petition should be sent to the President. The JSC had no disciplinary powers over judges in the current constitutional set-up.
  15. The purported disciplinary action taken against the judges of the Supreme Court by the JSC was unlawful and unconstitutional. The finding by the court that the JSC took the judges through a fair administrative process did not sanitize the unconstitutionality or illegality in light of the finding that the JSC had no constitutional or statutory authority to discipline judges. Administrative action taken without legal backing was unconstitutional.
  16. The JSC as empowered by section 47(2)(c) of the Judicial Service Act, was required to make regulations specifically to provide for all preliminary procedures for making any recommendations required to be made under the Constitution. Such regulations would ensure that judges facing allegations that could lead to removal from office were able to clearly predict the procedure to be followed. The JSC had made the regulations but they were pending at the National Assembly. The court could therefore not compel the JSC to do something that was in the hands of another state organ.

Consolidated petition partly allowed. Each party was to bear its costs.
Orders :-
(a) Petition No. 204 of 2016

  1. A declaration that the Judicial Service Commission was not mandated and/or required to administer any form of discipline against judges of the superior courts of Kenya and any such purported discipline such as admonishment was unconstitutional and was therefore null and void ab initio;
  2. A declaration that the Judicial Service Commission violated the Constitution by purporting to admonish Justices Mohammed Ibrahim, Jackton Ojwang and Njoki Ndung’u; and
  3. A declaration that the action of the Judicial Service Commission of issuing part determination on Mr. Apollo Mboya’s petition seeking the removal of Justices Mohammed Ibrahim, Jackton Ojwang and Njoki Ndung’u from office and reserving other limbs of the petition to a futuristic date was unreasonable, irregular and unlawful and was therefore unconstitutional and therefore null and void.

(b) Petition No. 218 of 2016

  1. An order of certiorari was issued calling into the court and quashing the decision of the Judicial Service Commission dated May 9, 2016 insofar as it found the conduct of Justice Njoki Ndung’u “unbecoming of a judge of the Supreme Court and amounting to misconduct”, and to the extent that she be “admonished for this misconduct”. The decision was also quashed insofar as it purported to reserve the determination of the additional grounds filed by Mr. Apollo Mboya on October 21, 2015 for consideration at a later date. For avoidance of doubt, the finding by the Judicial Service Commission that Mr. Apollo Mboya’s petition “did not meet the requisite threshold to warrant a recommendation for the appointment of a tribunal for….removal of Justice Njoki Ndung’u “in terms of article 168(1) and (4) of the Constitution” was valid and remained undisturbed;
  2. A declaration that in the circumstances of the case the constitutional jurisdiction of the Judicial Service Commission did not extend to merits review of the decision in the Supreme Court Petition No. 23 of 2014 Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & others as the Judicial Service Commission was attempting to inquire into matters lawfully conducted, transacted or decided by the judges of the Supreme Court in the course of the exercise of their judicial authority, functions and discretion; and
  3. A declaration that the decision by the Judicial Service Commission to purport to investigate Justice Njoki Ndung’u on the matters raised in Mr. Apollo Mboya’s petition as “further grounds” dated October 21, 2015 was unreasonable, unfair, unprocedural and unlawful on the grounds that it was ultra vires the power and authority vested in the Judicial Service Commission as it called for a merits review of lawful discretionary decisions of Justice Njoki Ndung’u in her capacity as a judge of the Supreme Court; and that it was a breach of the principles of natural justice and the rights of Justice Njoki Ndung’u to a fair and impartial process as enshrined in article 47 of the Constitution
CIVIL PRACTICE AND PROCEDURE

Requirements for filing an appeal at the Supreme Court

Cordisons International (K) Limited v Chairman National Land Commission & 43 others [2020] eKLR
Petition No. 14 of 2019
Supreme Court of Kenya
DK Maraga, CJ & P; PM Mwilu, DCJ & V-P; MK Ibrahim, NS Ndungu & I Lenaola, SCJJ
April 30, 2020
Reported by Kakai Toilii

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Civil Practice and Procedure – appeals – appeals to the Supreme Court – requirements – specifying the appellate jurisdiction - where it was alleged a matter was of general public importance - where it was alleged that a court took a trajectory of constitutional interpretation or application in determining a case - what were the factors to consider in determining whether a court took a trajectory of constitutional interpretation or application - what was the purpose of specifying the appellate jurisdiction when filing an appeal - Constitution of Kenya, 2010, article 163.

Brief facts:
The appellant contended that it had legitimate interest in the development of a wind power project on a parcel of land and having secured all necessary approvals, it was granted a leasehold interest over the subject land by the 6th respondent. The appellant further contended that it discovered that part development plans published in the Kenya Gazette as well as a letter of allotment had been issued to the 5th respondents in a bid to defeat the appellant’s interest. The appellant thus filed a suit at the Environment and Land Court seeking orders, inter alia, to quash the decision contained in the letter of allotment among other orders. The Environment and Land Court dismissed the suit and thus aggrieved by the decision the appellant filed an appeal to the Court of Appeal. The Court of Appeal the appeal dismissed the appeal.
Aggrieved by the Court of Appeal’s decision, the appellant filed the instant appeal. Before the appeal could be heard, the 5th, 6th and the 7th – 38th respondents filed preliminary objections on the court’s jurisdiction to hear and determine the appeal. The preliminary objections were based on the grounds that the appeal did not raise any matters of constitutional interpretation or application under article 163(4)(a) of the Constitution of Kenya, 2010 (Constitution) and that the appeal had not been certified as one involving a matter of general public importance under article 163(4)(b) of the Constitution.

Issues:

  1. What were the requirements for one to lodge an appeal to the Supreme Court as a matter of general public importance?
  2. What was the purpose of specifying the appellate jurisdiction of the Supreme Court when filing an appeal?
  3. What were the factors to consider in determining whether a court in determining a matter took a trajectory of constitutional interpretation or application? Read More...

Relevant provisions of the law
Constitution of Kenya, 2010
Article 163
4.Appeals shall lie from the Court of Appeal to the Supreme Court—

(a) as of right in any case involving the interpretation or application of this Constitution; and
(b) in any other case in which the Supreme Court, or the Court of Appeal, certifies that a matter of general public importance is involved, subject to clause (5).

5. A certification by the Court of Appeal under clause (4)(b) may be reviewed by the Supreme Court, and either affirmed, varied or overturned.

Held:

  1. For an appeal to lie to the court under article 163(4)(b) of the Constitution, articles 163(4) and (5) had to be complied with. From the record, there was no certification of the matter as being of general public importance as was required by the Constitution obtained by the appellant and so it could not be that the appeal was one filed under article 163(4)(b) even if the appellant had expressed that it had done so, and it had not.
  2. The appellant had not indicated what jurisdiction it was invoking in approaching the court. It was not for the court to speculate on jurisdiction and assign to each appeal a jurisdiction not specifically invoked by a party appealing a Court of Appeal judgment. An appellant was expected to specify such jurisdiction with clarity to enable both the court and the opposing party to know what case was before them.
  3. What was before the Environment and Land Court was a judicial review notice of motion in which orders of prohibition, mandamus and certiorari were being sought. The main issue in contention was the legality or otherwise of a letter of allotment dated February 7, 2017 issued by the 2nd respondent to the 5th respondent and whether conversely, the 2nd respondent ought instead to have issued land lease instruments to the appellant over the disputed parcel of land. Where specific constitutional provisions could not be identified as having formed the gist of the cause at the Court of Appeal, the very least an appellant should demonstrate was that the court’s reasoning, and the conclusions which led to the determination of the issue, put in context, could properly be said to have taken a trajectory of constitutional interpretation or application.
  4. The assumption of a task that transcended not just the reference to the rich generality of constitutional principle, it was a task that had to focus upon specific clauses of the Constitution, and called for the attribution of requisite meaning, tenor and effect.
  5. From both the judgments of the Environment and Land Court and the Court of Appeal, neither court was called upon to, specifically and directly put the meaning, tenor and effect of any article of the Constitution into their reasoning before resolving the issues placed before them. The fact that in doing so, reference was made to articles 47, 62 and 67 of the Constitution for example would not qualify in the context of the dispute between the parties to bring the instant appeal within the purview of article 163(4)(a) of the Constitution. The dispute was simple, whether the allotment letter issued to the 5th respondent was lawful or not and, whether the judicial review orders of prohibition, mandamus and certiorari were to issue. The administrative action in question never once took a proper constitutional trajectory.
  6. Whereas the preliminary objections would have been sustained for failure to state what specific provision of the Constitution the appellant was invoking, neither article 163(4)(a) and (b) of the Constitution could be properly invoked.

Preliminary objections by the 5th, 6th , 7th – 38th respondents allowed; appeal dismissed; appellant to pay the costs to the 5th, 6th and 7th – 38th respondents.

TAX LAW

A Kenyan entity trading with a non-resident person not having a permanent establishment in Kenya, is obliged to deduct and remit withholding tax

Kenya Revenue Authority & another v Republic (Ex parte) Kenya Nut Company Limited [2020] eKLR
Civil Appeal No. 58 of 2015
Court of Appeal at Nairobi
W Ouko, D K Musinga and S Kantai, JJA
April 24, 2020
Reported by Chelimo Eunice

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Tax Law – withholding tax – legal framework governing withholding tax – criteria for charging withholding tax – obligation & duty to deduct and remit withholding tax from a foreign entity trading with a Kenyan entity – whether Kenya Revenue Authority and the Commissioner of Domestic Taxes had jurisdiction to assess withholding tax - whether Kenya Revenue Authority and the Commissioner of Domestic Taxes exceeded their jurisdiction or acted against the law in assessing and demanding for withholding tax in a situation where payment was made at source and when it was not possible to deduct the tax from the overseas agents’ commission - Income Tax Act, sections 10, 35 and 96.
Tax Law – withholding tax - penalties and interest charged on failure to deduct or remit withholding tax – which law was applicable to withholding tax between the year 2000 and 2004 - Income Tax Act, sections 35, 72D and 93; Income Tax (Withholding Tax Rules) 2001, rule 14A.
Civil Practice and Procedure - judicial review – nature & scope of judicial review – judicial review orders - orders of certiorari and prohibition – when were orders of certiorari and prohibition issued - whether aspects of merit review of administrative action could be included in judicial review - Constitution of Kenya, article 27.

Brief facts:
The appellant carried out a tax audit on the respondent’s business between 2002 and 2005. After being given an opportunity to provide an explanation on some of the issues arising from the audit, the respondent was ultimately informed through a letter dated on October 1, 2007 that it owed Ksh. 33,534,855 in withholding tax based on the commissions paid to their overseas selling and marketing agents. The appellant assessed and demanded the said amount via a letter dated August 19, 2008 (assessment notice). The respondent objected to the assessment and insisted that no withholding tax was owed. To forestall the intended action by the appellant, the respondent filed in the High Court (the trial court) a judicial review application.
The trial court found merit in the motion and issued an order of certiorari and quashed, among others, the decision of the appellant contained in the letter dated August 19, 2008. Aggrieved by the decision, the appellant filed the instant appeal on grounds, among others, that the trial court erred; in failing to find that it was the duty of the respondent to ensure that withholding tax was deducted and remitted to the appellants irrespective of whether the proceeds of sale were remitted to it or its agents and in stating that there was no provision in the Income Tax Act that justified the levying of penalties and interests.

Issues:

  1. Who was obliged to deduct and remit withholding tax from a foreign entity trading with a Kenyan entity?
  2. Whether Kenya Revenue Authority and the Commissioner of Domestic Taxes had jurisdiction to assess withholding tax where payment was made at the source to a foreign entity.
  3. What amount of penalties and interest would be charged on failure to deduct or remit withholding tax? Read More...

Relevant provisions of the Law
Income Tax Act:
Section 35(1);
“A person shall, upon payment of an amount to a non-resident person not having a permanent establishment in Kenya in respect of-
(a) a management or professional fee;
(b) a royalty;
(c) interest, including interest arising from a discount upon final redemption of a bond, loan, claim, obligation or other evidence of indebtedness measured as the original issue discount;
Provided that:
(e) interest which is chargeable to tax, deduct therefrom tax at the appropriate non-resident rate.

Held:

  1. The Income Tax Act (the Act) was enacted to, among other purposes, make provision for the charge, assessment and collection of income tax, for the ascertainment of the income to be charged, for the administrative and general provisions relating thereto.
  2. Withholding tax was governed by sections 10 and 35 of the Act and the Income Tax (Withholding Tax Rules) 2001 (the Rules). It was a tax that was chargeable on, among others, interest, dividends, royalties, management or professional fees, commissions, pension or retirement annuity, creating an obligation on the tax payer, whether resident or non-resident, to deduct and remit the tax on eligible income which accrued in or was derived from Kenya.
  3. During the period of tax audit conducted by the appellant in respect of the respondent’s exports between 2002 and 2005, it was confirmed that the foreign selling and marketing agents were paid commission. On such commission, being to a non-resident without a permanent establishment in Kenya, withholding tax was levied.
  4. The remedy of judicial review was concerned with reviewing not the merits of the decision of which the application for judicial review was made, but the decision making process itself. The purpose of the remedy of judicial review was to ensure that the individual was given fair treatment by the authority to which he had been subjected. It was not part of that purpose to substitute the opinion of the court for that of the authority constituted by law to decide the matter in question. Merit consideration could be entertained in exceptional cases, especially where it was shown that there was no evidence upon which such a finding could be made so as to render the finding unreasonable.
  5. On account of consideration of proportionality and unreasonableness of a decision in issue, analysis of article 47 of the Constitution as read with the provisions of the Fair Administrative Action Act, there was a shift of judicial review to include aspects of merit review of administrative action. However, even if the merits of the decision was undertaken, the court had no mandate to substitute its own decision for that of the administrative body.
  6. The orders of certiorari and prohibition were issued as a matter of discretion and judicial discretion was exercisable in the interests of justice, rationally but not capriciously or whimsically. The appellate court could only interfere with the exercise of that discretion if it was satisfied that the trial court misdirected itself in some matter as a result of which it arrived at a wrong decision, or if it was manifest from the case as a whole that the trial court was clearly wrong in the exercise of discretion and accordingly occasioned injustice.
  7. Certiorari would issue to quash a decision already made and an order of certiorari would issue if the decision was made without or in excess of jurisdiction, or where the rules of natural justice were not complied with or for such like reasons.
  8. Prohibition, on the other hand, was an order from the High Court directed to an inferior tribunal or body which forbade that tribunal or body to continue proceedings therein in excess of its jurisdiction or in contravention of the laws of the land. It lay, not only for excess of jurisdiction or absence of it but also for a departure from the rules of natural justice.
  9. Under the Income Tax Act and the Kenya Revenue Authority Act, the Commissioner of Domestic Taxes (the Commissioner) wielded immense power and was generally responsible for the control and the collection of, and accounting for, tax. With that, the Commissioner was empowered to assess and recover tax from payers. By the same token he had discretion to, inter alia, refrain from assessing or recovering taxes, penalties or interest. From the contents of the letters in question, there was nothing to suggest that the appellants had no jurisdiction to assess withholding tax, or that they exceeded their powers, or that their actions were in contravention of any law. In addition, the tax assessment was shared with the respondent by the appellant. The latter made comments in their letter to the appellants dated June 29, 2006 and even engaged tax experts, M/s Ernst & Young, to analyze the assessment. Further, there was a meeting between the parties to discuss the issues relating to that audit. At the meeting the respondent was availed an opportunity to state its position by providing certain details and particulars. It, therefore, could not be correct to assert that in arriving at the impugned decision, the appellant did not observe the rules of natural justice.
  10. Given its exposure and involvement in international trade, the respondent had the capacity to device practical technique, methods and systems that would ensure collection and remission of tax from source. For instance, provision ought to have been made in the contract between them and the foreign agents to ensure that at the point the commission was paid, withholding tax should have been factored in and thereafter remitted to the respondent.
  11. The trial court appreciated the importance and prudence of placing the responsibility of devising workable procedures to ensure compliance with tax law upon the tax payer and decried the effect the converse would have on tax administration and enforcement. The trial court, however, erred in proceeding to hold that though the commission in question was paid by the respondent, the respondent was unable to deduct the tax at the time its agents were receiving payments due to the fact that the commissions were deducted at source; and that had the proceeds of sale been remitted, first, to the respondent before the payment of the said commission there would have been no question of the applicant’s liability to deduct the same in form of withholding tax.
  12. With regard to withholding tax due from a non-resident person not having a permanent establishment in Kenya, but trading with a Kenyan entity, it became the business of the latter to ensure that the tax was deducted from such payment and remitted. That obligation was mandatory. The Kenyan entity was deemed to have full knowledge of the provisions of sections 10, 35 and 96 of the Act. To enter into a contract with foreign agents which allowed foreigners to deduct and retain at source their commissions without putting in place mechanisms of taking into account withholding tax was not only reckless on the part of the respondent but was also intended to deny the country revenue. The argument that the amount retained by the agents comprised commissions and expenses was immaterial. The respondent was under an obligation to identify and satisfy the appellants what portions were expenses and which ones were commissions.
  13. The appellants were also accused of breaching the respondent’s legitimate expectation that no withholding tax was expected to be collected by it from foreign traders after it was disclosed that payment had been made at source. Legitimate expectation could only operate within the law and it could only be relied on when the law had been complied with. It could not, however be relied on to shield a person from paying tax. Even though a public body could create legitimate expectation, for legitimate expectation to arise, there had to be an express, clear and unambiguous promise given by a public authority, the expectation itself had to be reasonable, the representation had to be one that the decision-maker was competent to make and there could not be a legitimate expectation against clear provisions of the law or the Constitution.
  14. Amendments to section 35 (6) of the Act gave the Commissioner power to impose such penalty as could, from time to time, be prescribed under the Rules. Rule 14A of the Rules had prescribed that the penalty for failure to deduct or remit withholding tax for the purposes of section 35(6) of the Act, the Commissioner could impose a penalty equal to 10% of the amount of the tax involved, subject to a maximum penalty of one million shillings.
  15. Rule 14A of the Rules was headed and specific to penalty for failure to deduct or remit withholding tax under section 35 of the Act. It was the relevant provision on the point under consideration. It was, however relevant only to that small extent. Rule 14 A of the Rules came into effect by virtue of Legal Notice No. 54 which took effect from July 1, 2004. The withholding tax demanded from the respondent was for the years 2000-2005. Rule 14A of the Rules could not apply to the years between 2000 and June, 2004. That period was covered by section 72D of the Act which had been introduced by Act No. 8 of 1997 and which increased the penalty to 20% from the original 15%. Section 94 of the Act provided that, in addition to the penalty under section 72D of the Act, a late payment interest of 2% per month would also be charged on any amount due until it was fully recovered, provided the interest did not exceed 100% of the principal tax owing. That was the extent to which the percentage payable on the penalty was adjusted.
  16. On the issue of whether there was exemption of fruits and vegetables from taxation, the same was not argued before the trial court, and the court found that it had been abandoned by the appellants. Thus, the same would not be considered by the instant court.

Appeal allowed with costs. Percentage of penalty adjusted to 10% of the amount of the tax involved, subject to a maximum penalty of Kshs. 1,000,000 for the period July, 2004 to 2005.

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