Kenya Revenue Authority & 2 others v Darasa Investments Limited [2018] KECA 358 (KLR)

Kenya Revenue Authority & 2 others v Darasa Investments Limited [2018] KECA 358 (KLR)

IN THE COURT OF APPEAL

AT MALINDI

(CORAM: VISRAM, KARANJA & KOOME, JJ.A)

CIVIL APPEAL NO. 24 OF 2018

BETWEEN

KENYA REVENUE AUTHORITY.......................... 1ST APPELLANT

COMMISSIONER OF CUSTOMS SERVICES.....2ND APPELLANT

JULIUS MUSYOKI...................................................3RD APPELLANT

AND

DARASA INVESTMENTS LIMITED.........................RESPONDENT

(Being an appeal from the ruling of the High Court of Kenya at Mombasa

(Ogola, J) dated 22nd February, 2018

inHC. Misc. Civil Application No. 67 of 2017)

***************

JUDGMENT OF THE COURT

[1] Initially, the scope of judicial review and the remedies which could issue thereunder were set out in the Law Reform Act and Order 53 of the Civil Procedure Rules. The ground(s) upon which such review could be exercised by the High Court was where the administrative decision/action in question was deemed as being ultra vires and/or against the rules of natural justice. Similarly, the judicial review remedies which the High Court could issue were restricted to orders of certiorari, mandamus and prohibition. As Diplock J. had predicted in Council for Civil Service Union vs. Minister for Civil Service [1995] AC 374 there have  been  developments m  judicial  review.  In his own words, he expressed:-

"Judicial review has ... developed to a stage where ... one can classify under three heads the grounds upon which administrative action is a subject to control by judicial review.  The first ground I would call 'illegality',  the second  'irrationality' and the  third 'procedural impropriety'. That  is  not  to  say  that further  developments on a case by case basis may not in the course of time add further  grounds. I have in mind particular the possible adoption in the future of the principle of proportionality."[Emphasis added]

[2] Echoing those developments in the Kenyan legal system, Peter Kaluma in Judicial Review, Law and Practice, 2nd Edition at page 69 states that:-

"Thus judicial review is no longer a strict administrative law remedy as was the case in the past. Judicial review is currently an administrative law remedy and a constitutional fundamental. The right to fair administrative action, the right to written reasons for adverse administrative action and the right to judicial review of administrative action are now enshrined in the Constitution as fundamental rights and freedoms to be enjoyed by every person subjected to administrative action."

See Article 47 of the Constitution and Section 7(2) of the Fair Administrative Action Act. Likewise, the remedies which could issue have since expanded from the traditional remedies to declarations, damages and injunctions as set out under Section 11 of the Fair Administrative Action Act.

[3] Nonetheless, judicial review orders are still discretionary m nature and whenever this Court is called upon to interfere with the exercise of judicial discretion, as in this case, it ought to be guided by the principles enunciated in Coffee Board of Kenya vs. Thika Coffee Mills Limited & 2 Others [2014] eKLR. The Court ought not to interfere with the exercise of such discretion unless it is satisfied that the Judge misdirected himself in some matter and as a result arrived at a wrong decision, or that it be manifest from the case as a whole that the Judge was clearly wrong in the exercise of discretion and occasioned injustice.

[4]  With the foregoing in mind, the brief background information underpinning this appeal  has its origin to Gazette  Notice  No 4536 dated  12rh  May, 2017, wherein the Cabinet Secretary of the National Treasury under Section 114 (2) of the East African Community Customs Management Act 2004 (EACCMA), gave notice of a general exemption of duty on sugar imported between 12th May, 2017 and 31st August, 2017. The reason for the exemption was the drought signaled in a Presidential declaration through executive order No. 1 of 2017.

[5]  Pursuant to the said waiver, Darasa Investments Limited (the respondent) claimed that it imported some 40,000 tonnes of brown sugar from Brazil, which was loaded in a vessel known as Anangel Sun on 15th July, 2017 destined for arrival at a Port in Mombasa, Kenya on or about 28th August, 2017 (within the exemption period). However, as per the respondent, bad weather conditions on the high seas coupled with the fact that Anangel Sun could not berth at the Mombasa Port due to its sheer size, the projected date of arrival was not met. This state of affairs compelled the Anangel Sun to proceed to its next destination  at Jebel Ali Port in Dubai where the sugar consignment was offloaded  and transhipped.

[6] Meanwhile, the respondent wrote to the Cabinet Secretary of the Ministry of Agriculture, livestock and Fisheries, seeking extension of the import exemption under the Gazette Notice No. 4536. It appears that the respondent was not alone; about 13 other companies who had opted to take advantage of the exemption had also not managed to get their sugar consignments into the country within the exemption period for one reason or another. In turn, the Cabinet Secretary of the Ministry of Agriculture, livestock and Fisheries, wrote to his counterpart at the Ministry of National Treasury recommending the extension in question.  The Cabinet Secretary for National Treasury acceded to the request on condition that only the consignments which were shipped before the expiry date in the Gazette Notice 4536 would benefit from the extension. Towards that end, the said Cabinet Secretary vide Gazette Notice No. 9802 dated 41 October, 2017 amended the first notice in the following manner:-

"It is notified for the general information of the public that the Gazette Notice No. 4536 of 2017, is amended by-

i) In item (a), by deleting the word 'imported' and substituting thereof the words 'loaded into a vessel destined to a port in Kenya.'[Emphasis added]

[7] Thereafter, the respondent's consignment was transhipped from Dubai to Mombasa aboard a vessel known as 'MV Iron Lady'. From the record the consignment arrived at Mombasa between 28th October, 2017 and 30th October, 2017. All the same, the respondent’s agent tried to clear the consignment of imported sugar, under the above duty exemption status but after some back and forth engagement and written correspondence, the appellants declined to clear the consignment. The appellants claimed that the consignment did not meet the conditions of the Gazette Notices because of the inconsistencies relating to the date of loading, place of inspection, certificate of origin and change of ownership.

[8] The matter therefore became a dispute that fell before Ogola, J. that was filed in court by the respondent by way of judicial review application. The respondent applied amongst other orders, for the decision made by the appellants, which was communicated to it vide a letter dated 22nd November, 2017, to be quashed. In the said letter, the Commissioner Customs & Border Control declined to exempt the respondent's consignment from payment of duty as provided under Gazette Notice No 4536 and as subsequently amended by Gazette Notice No 9801. The Commissioner also demanded payment of Kshs.2, 548,542,325 as duty on the sugar consignment before the same could be cleared.

[9] The key issues which fell for determination before the learned Judge were inter alia; whether the respondent's consignment of imported sugar was loaded in a vessel destined to a Port in Kenya between the 12th May, 2017 and the 31st  August, 2017; whether the respondent was entitled to duty exemption; whether the  appellant's decision  to  deny  the  respondent's  duty  exemption  was unreasonable, unfair and highhanded and whether the respondent should have invoked the alternative remedy provided for under Sections 229{1) & (2) as well as 230 of the EACCMA as read with Sections 2 & 12 of the Tax Appeals Act, 2013.

[10]  After hearing the matter and by a ruling dated 22nd February, 2018 the subject matter of this appeal, the learned Judge issued orders in favour of the respondent in the following terms:-

a) An  order of certiorari to remove into this Honourable court and quash in its entirety the decision by the respondents, communicated vide the letter dated 22nd November, 2017, to levy duty/tax of Kshs. 2,548,542, 325 on sugar imported under Entry 2017 MSA 66845998, BL BSS802017 for the alleged failure by the applicant to meet the provisions of the gazette notice No. 4536 dated 12th May, 2017 as amended by gazette notice No. 9802 dated 4th October, 2017 respectively.

b) An  order of prohibition directed towards the respondent restricting /prohibiting the respondents, its agents, officers and any person acting under that office from levying or demanding any duty/  taxes over and above Kshs. 422,106,560 already  paid as import declaration fees, maritime fee levy in regard to sugar imported under entry 2017 MSA 6684598, BL; BRSS802017 pursuant to the provisions of the gazette  notice No. 9802  dated  4th October,  2017 respectively.

c) An order  of Mandamus  ordering  and compelling the respondents  to immediately  process, clear and release on  duty  free  basis, the  applicant's  entire sugar  consignment  or  40,000  MT  of  Brazilian brown  sugar  imported under  Entry  2017  MSA. 6684598, BL BR SS802017 as contemplated. by the provisions of the gazette notice No 4536 dated 12th May, 2017 as amended  by gazette notice No. 9802 dated 4th October, 2017 respectively.

d) The costs of the application shall be for the Ex Parte applicant.

[11] Aggrieved by the aforesaid orders, the appellants appealed against the entire ruling, raising 7 grounds of appeal which we paraphrase as; the learned Judge was faulted for, finding  the court had jurisdiction  to entertain  the proceedings despite the fact that the respondent had not exhausted  the available alternative remedies; sitting on appeal of the appellants decision; finding the appellants had not given reasons for  their decision  in the letter dated  22nd November, 2017; shifting  the  burden  of  proof  to  the  appellants;  finding  the  respondent  was subjected to discrimination; finding the appellants decision was unreasonable and finally, for finding  that the respondent  was entitled  to exemption  of duty  on account of legitimate expectation.

[12] During the hearing of the appeal, and with leave of the Court, both parties filed written submissions which we will consider along the oral highlights.

[13] M/s Otachi and Ontweka teaming up for the appellants made some oral highlights of their written submissions and elaborated on the grounds of appeal. First on jurisdiction, they pointed out that the issue was raised in the affidavit of Rosemary Mureithi, who deposed that the court's judicial review jurisdiction was unlawfully invoked because the respondent had not exhausted alternative statutory remedies. It was in their view wrong for the learned Judge to posit that the issue of jurisdiction was raised during submissions and as a mere afterthought. According to counsel, although it is prudent that an objection on jurisdiction should be raised at the earliest opportunity, the same could be raised at any stage of the proceedings and even on appeal owing to its significance in any matter before a court. Citing the case of Kenya Ports Authority vs. Modern Holdings [E.A] Ltd. 2017 eKLR they added that jurisdiction could neither be conferred by consent nor acquiesced by the parties.

[14] On the issue of alternative remedies,  counsel  for the appellants submitted that  the  Judge  misapprehended  the  scope  of  the  Tax  Appeals Tribunal 's jurisdiction as being limited to disputes over quantum of tax payable. It was urged that the Tax Appeal Tribunal was not precluded by law from considering disputes relating to liability to pay tax.

[15] Counsel went on to cite a retinue of authorities; Kenya Revenue Authority vs. Keroche Industries Ltd. - Civil Appeal No 2 of 2008 (unreported),  Grain Bulk Handlers Ltd. vs. Kenya Revenue Authorities [2018] eKLR and Cortec Mining Kenva Limited vs. Cabinet Secretary Ministry of Mining [2017] eKLR.  The  ratio  decidendi  which  runs  through  those  cases  is  that  where Parliament has provided statutory mechanism for resolving disputes, parties must exhaust the available mechanisms for resolving disputes before invoking judicial review, which  should  be sought  as a last resort  in exceptional circumstances where facts are not disputed and it is only a question of exercise of administrative malaise's by a public body or office.

[16] Further, Section 9 of the Fair Administrative Action Act, 2015 which operationalized Article 47 of the Constitution, is clear on that position. It stipulates that a court exercising its judicial review jurisdiction, can only entertain a matter where the alternative remedies have not been exhausted in exceptional circumstances. Counsel contended that the respondent's case did not fall under such an exception. Moreover, even assuming it qualified as an exceptional case, the respondent was required to make a formal application to be exempted from exhausting the alternative remedies which it did not.

[17] The learned Judge was faulted for substituting his own decision for that of the 2nd appellant.  Elaborating  further,  it was submitted  that  issues  of  tax  are squarely  within  the  mandate  of  the appellants, the court  therefore  could  not review the errors, if any, arising therefrom  as though it was sitting  on appeal  of the decision of the 2nd  appellant.  By setting out to determine the date of loading of the cargo through evaluating evidence in letters dated 12th January 2018 and 29th January,  2018, which were  authored  when  there  was  live  litigation, the learned Judge delved into factual and evidential aspects which were irrelevant considerations in judicial  review. Nonetheless, the disputed issues were never resolved and the appellants were denied an opportunity to execute their mandate through court orders.

[18] Besides, the learned Judge  disregarded  very material  inconsistencies in the documents  presented by the  respondent, for example  a pre-export  verification certificate produced by the respondent showed the Brazilian brown sugar was produced  in  August,  2017 and  September, 2017. Thus,  there was  a serious inconsistency as the respondent  stated  that the sugar  was loaded  on  15th July, 2017; also the ownership of the consignment was indicated as Ms  Safina Engineering Ltd. in Kampala according to the letter of credit issued by Diamond Trust Bank; there was also another Bill of Lading issued in Dubai on the 17th October, 2017 wherein the exporter of  the consignment  is indicated  as  Multi Commerce FZC on behalf of M/S Lumira General Trading Co L.L.C of Sharjah UAE for the same consignment of 40000 tonnes. Initially, the sugar consignment which was on board Anangel Sun did not show the respondent as the consignee but was being exported on behalf of Sabina Engineering Co Ltd. of Kampala Uganda.  Even  if  the sugar  was  loaded  in Dubai, the question  still  remained whether  this was done within  the period  of exemption;  these were legitimate questions that were asked by the appellants because they had a duty to clear the consignment  in accordance  with Gazette  Notices. All in all, the respondent had not established that it had shipped the consignment in issue within the prescribed time frame hence was liable to pay duty for the same.

[19] As far as the appellants  were concerned, the letter dated  22nd November, 2017 clearly set out  the reasons for the imposition  of duty on the respondent's consignment. The reasons included inconsistencies relating to the date of loading, date and place of inspection, certificate of origin and change of ownership. In that regard counsel emphasized  that although the letter did not elaborate much on the inconsistencies,  there were previous correspondence which should be read with the aforesaid letter to demonstrate  the respondent was given a hearing before the aforesaid letter was dispatched.  Those inconsistencies removed the consignment from the ambit of the Gazette Notices.

[20] The appellants  took issue with what they deemed  as the learned  Judge's finding to the effect that the Gazette Notices gave rise to legitimate expectationthat the respondent's consignment would be cleared duty free without proof that conditions for such waiver were met. In addition, there was no evidence or basis to substantiate the learned Judge's finding that the appellants had discriminated the respondent as the documentation in respect of the other 13 importers did not have the same inconsistencies as those by the respondent.  It is on those grounds that we were urged to allow the appeal.

[21] The appeal was strenuously  opposed  by Mr. Ngatia teaming  up with Mr Mosota for  the respondent. Mr. Ngatia stated  that although judicial  review is founded on Article 47 of the Constitution and the Fair Administrative Action Act which codified the common law and public law principles thereto, review of administrative  action is to be undertaken  by a court. In support of that line of argument, he referred to Article 47(3)(a) of the Constitution which  stipulates that: -

"Parliament shall enact legislation to give effect to the rights in clause (1) and that legislation shall-

a) provide for the review of administrative action by a court or, if appropriate, an independent and impartial tribunal;..."[Emphasis added]

[22] It is only the High Court under the Law Reform Act that has jurisdiction to issue  orders  of  certiorari, prohibition  and  mandamus; the  complaint  by  the respondent could only be litigated in the High Court as the alternative tribunal, that is, the Tax Appeals Tribunal has no power to adjudicate a public law dispute. In any event, the Tax Appeal Tribunal established under Section 12 of the Tax Appeal Act only deals with issues of quantum of tax payable.

[23] Counsel referred us to the case of Municipal Council of Mombasa vs. Republic & another [2002]  eKLR where it was stated that judicial  review  is concerned with the decision making process, not with merits of the decision itself; the court would concern itself with issues as to whether the decision makers had jurisdiction,  whether persons  affected by the decision  were heard before it was made and whether in making the decision the maker took into account relevant matters  or  did  take  into  account  irrelevant  matters.  In  the  instant  case,  the appellants  were  faulted  for denying  the  respondent  a  hearing  and  for  taking irrelevant matters into consideration and thereby arriving at an erroneous decision that affected the respondent adversely.

[24]  In the alternative,  Mr. Ngatia while making  reference to persuasive High Court decisions in the case of;  Republic vs. Senior Magistrate  Mombasa Ex Parte  HL  & Another  [2016]  eKLR  and Republic  vs. Commiss_ioner  of Customs  Services  Ex Parte Unilever  Kenya  Ltd. -High Court  Misc. Application No. 181 of 2011, argued that the existence of an alternative remedy by itself is not a ground  for declining a judicial  review relief, especially  where the administrator's decision was ultra vires.

[25] We understood counsel’s argument also to be that the appellants having not only taken part in the proceedings but also enjoyed stay of execution issued thereunder could not object to the jurisdiction of the High Court at the stage they did. The appellants' raised issues of the existence of alternative remedies on the threshold of the hearing which  was scheduled 14th February,  2018 vide an affidavit of Rosemary Murithi which was filed in the High Court on 30th January, 2018. Counsel cited the case of The Owners of the Motor Vehicle "Lillian S" vs. Caltex  Oil Kenya Ltd [1989] KLR 1, and emphasized  that an objection  to jurisdiction should be raised at the earliest opportunity since jurisdiction is a condition precedent  to the whole case as set out and mandated by statute or the Constitution. He particularly, relied on the following sentiments of Nyarangi J (as he then was):-

"I think  that  it is reasonably plain  that  a question  of jurisdiction ought  to  be  raised  at  the earliest opportunity and  the court  seized of the matter is then obliged to decide the issue right away on the material before it.Jurisdiction is everything.Without it, a court has no power to make one more step. Where a court has  no  jurisdiction, there would  be no  basis  for  a continuation of proceedings pending other evidence. A court of law downs tools in respect of the matter before it the moment  it holds  the opinion  that  it is without jurisdiction"

[26) Like, the appellants, Mr. Ngatia submitted that following the amendment  of the initial Gazette Notice, all an importer  was required  to establish  in order to benefit from exemption of duty, is that the sugar consignment was loaded into a vessel destined to a port in Kenya within the period between l1th May, 2017 and 31st August, 2017. According to counsel, the commercial invoice indicated the date of shipment from Brazil as 15th July, 2017 and sugar was to be loaded in a vessel, Anangel Sun for offloading in Mombasa. The Bill of Lading also showed the sugar consignment was loaded at the port of Santos, Brazil and the port of discharge was Mombasa sea Port; the sugar was loaded into the vessel and set sail on 27th July, 2017.

[27] In the respondent's view the appellants were wrong to deny it clearance on the grounds that the documents presented had inconsistencies  regarding date of loading,  date  and  place  of  inspection, certificate of  origin  and  change  of ownership. By doing so, the appellants exhibited unreasonableness by engaging on irrelevant considerations when the only issue was whether the consignment of sugar was loaded into a vessel within the prescribed  period. Be that as it may, despite the respondent giving an explanation for the so called inconsistencies, the appellants  merely  contended  that  the issues were  not satisfactorily  addressed without giving the respondent a fair hearing.

[28] Taking into account the evidence on record, the respondent had discharged its evidential burden by showing the cargo was loaded in Brazil  within the exemption period. As such, it was up to the appellants to disprove the same which they did not. This was submitted  on behalf of the respondent.

[29] The respondent maintained that the learned Judge had at no point substituted his factual findings with that of the appellants. All the learned Judge did was to consider whether the action in issue was lawful, reasonable and procedurally fair as delineated under Article 47(1) of the Constitution. He went on to submit that the appellants should have given reasons as to why they found the respondent 's explanation unsatisfactory. Last but not least, counsel claimed that out of the 14 companies  which  had sought  extension  of  the  exemption  of  duty, only  the respondent 's  consignment was not cleared  duty free. This evidenced discrimination on the part of the appellants. In conclusion, Mr. Ngatia urged us to dismiss the appeal.

[30] We have considered the record of appeal, both written and oral submissions and authorities cited. In our respectful view, this appeal herein turns on the following issues:-

a) Did the learned Judge  have jurisdiction to entertain the judicial review proceedings? and if so,

b) Was the appellants' decision contained  in the letter dated  22nd November,  2017 amenable to  judicial review as sought by the respondent?

c) Did  the  learned Judge  properly  exercise his discretion  in issuing the orders he did?

[31] Jurisdiction is what clothes a court with the authority to entertain a matter before it and issue appropriate orders. A court either has jurisdiction or doesn't. It cannot be inferred or presumed. This Court in Adero  & Another  vs. Ulinzi Sacco Society Limited  [2002] 1 KLR 577, sufficiently summarised the law on jurisdiction as follows;

"1....

2. The jurisdiction either exists or does not ab initio ...

3. Jurisdiction cannot  be conferred by the consent  of the  parties or  be  assumed on  the  grounds that parties  have acquiesced  in actions  which  presume the existence of such jurisdiction.

4. Jurisdiction is such an important matter that it can be raised at any stage of the proceedings even on appeal."

See also Kenya Ports Authority vs. Modern Holdings [E.A] Limited [2017] eKLR. Based on the foregoing, we find that the learned Judge erred in holding that the appellants had consented and/or acquiesced to the court's jurisdiction by participating in the judicial review proceedings.

[32) The appellants' objection to the High Court's jurisdiction was grounded on the allegation that the respondent had not exhausted the alternative remedies provided under the EACCMA and Tax Appeals Act. On one hand, Section 229 (1) of the EACCMA provides that:-

"A person directly affected  by the decision or omission of the Commissioner or  any other  officer  on matters relating to customs shall within thirty  days of the date of the  decision  or  omission  lodge an  application for review of that decision or omission."

On the other hand, Section 12 of the Tax Appeals Act provides:-

"A  person  who  disputes the  decision  of  the Commissioner on  any  matter  arising  under  the provisions of any tax Jaw may, subject to the provisions of the relevant tax law, upon giving notice in writing to the  Commissioner,  appeal to  the  Tribunal..." [Emphasis added]

[33] In light of the foregoing provisions, we respectfully disagree with the respondent's  position that alternative remedies thereunder specifically relate to quantum or assessment of tax payable. The wording used thereunder is clear that any decision which is made by the Commissioner or any other officer under the respective Acts is subject to review by the Commissioner under Section 229 of the EACCMA and appeal to the Tax Appeals Tribunal.

[34] It is trite that where the Constitution or statute confers jurisdiction upon a court, tribunal, person, body or any authority, that jurisdiction must be exercised in accordance with the Constitution or statute.  In Secretary, County  Public Service Board  & another vs. Hulbhai  Gedi Abdille [2017] eKLR  this Court expressed  itself as follows:-

"Time  and  again  it  has  been said  that  where  there exists other sufficient and adequate avenue or forum to resolve a dispute, a party ought to pursue  that avenue or  forum  and  not  invoke  the  court process  if  the dispute could very well and effectively be dealt with in that  other  forum. Such  party  ought  to seek redress under the other  regime."

What then is the consequence, if any, of the respondent’s failure to invoke the alternative remedies?

[35] As appreciated by the parties, availability of an alternative remedy is not a bar to judicial review proceedings. It is only in exceptional cases that the High Court can entertain judicial review proceedings where such alternative remedies are not exhausted.  This position is fortified by the decisions of this Court in Cortec Mining Kenya Limited vs. Cabinet Secretary Ministrv  of Mining & 9 others [2017] eKLR and  Kenya Revenue Authority & 5 others vs. Keroche Industries Limited -Civil Appeal No. 2 of2008. Perhaps, that is the reason why the legislator under Section 9(4) of the Fair Administrative Action Act stipulated that:-

"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 remedv if the court  considers such exemption to be in the interest of justice."[Emphasis added}

Our  reading  of  the  above provision  reveals  that  contrary  to  the  appellants contention, the High Court  or a subordinate court  may on  its  own motion  or pursuant  to an application  by the concerned  party, exempt  such  a party  from exhausting the alternative  remedy.

[36]  Did the respondent 's case fall within the exception? The principles which a court should consider in determining whether a case falls within the exception are settled. This Court in Republic  vs. National  Environmental Management Authority- Civil Appeal No. 84 of2010,_set out the said principles as follows:

"...in  determining whether an  exception  should be made and  judicial review granted, it was necessary for the  court to  look  carefuiJy  at  the  suitability of  the statutory appeal  in the context  of the particular case and  ask  itself  what,  in  the  context  of  the  statutory powers,  was  the real  issue to  be  determined and whether  the statutory appeal  procedure was suitable to determine it ..."

[37] We find that the issue in dispute was the appropriateness or otherwise of the process  or  mode  adopted  by  the  appellants  in  arriving  at  the administrative decision as contained in the letter dated 22nd November, 2017. In other words, the respondent sought the review of the decision  which it deemed as being unreasonable, unlawful and irrational. To us, the dispute rightly  fell within the scope of judicial  review  which is concerned  with  the decision  making process rather than  the merit consideration  of the decision  in issue. As respondent  was alleging arbitrariness on the part of the appellants, on the face of it, it would seem the High Court could not have declined to hear the matter, but once you excavate further  as  it  happened  in  the  course  of  the  hearing;  that  the refusal  by  the appellants  to clear the sugar was due to failure on the part of the respondent  to produce evidence  to show that the subject sugar was exempt from duty, that is when matters  begin to look like perhaps the judicial  review forum  was not the most efficacious  in the circumstances.  This is because judicial  review does  not avail parties' court room processes to thrash out disputed matters. We shall revert to this issue later in paragraph 40 of this judgment.

[38] The  next issue  for consideration  is whether  the appellants' decision  was amenable  to  judicial  review? As  we  have  set  out  above,  judicial review  is concerned with the decision making process and not the merits of the decision in respect of which the application for judicial review is made. This was aptly stated by this Court in  Commissioner of Lands vs Kunste Hotel Ltd [1997] eKLR. As such, what the learned Judge was called upon to do was to examine the process adopted by the appellants in declining to exempt the respondent's consignment.

[39] Following  the amendment  of the initial Gazette  Notice, the learned  Judge observed, and correctly so, that the respondent was required to establish  that the consignment  was loaded onto a vessel  destined  to a port  in Kenya  within  the exemption period. In our view, this was to be done through the requisite shipping documents submitted  by the respondent  to the appellants.  ·

[40]  From the record, it is clear  that the appellants  did examine  the shipping documents which were handed in by the respondent to determine that very issue.

the consignee is given as Darasa Investment Ltd. of  P.O Box  6883-00622  of  Nairobi Kenya. Initially the  sugar  consignment which was onboard M/V Anangel Sun did not show Darasa Investments as the consignee ...

We would appreciate your speedy clarification  on the date of loading,  date  and  place of inspection, certificate  of origin,  change of ownership  of  the goods to enable determination as to whether the subject sugar consignment meets the terms of the gazette notice."

[41]  The  respondent  responded  to  the  queries through  a  letter  dated  21st November, 2017. We set out the pertinent extract of the said letter:-

"We ... wish to clarify the issues raised in the said letter as follows:

1) Date of Lading

The sugar  was loaded  by Bill of Lading  number BRSS802017 on 15th of July, 2017. The consignee was Diamond Trust Bank Limited based on a letter of credit issued to Darasa Investments Limited...

2) Date and Place of inspection

The consignment was transhipped via Jebel Ali in Dubai as the vessel did not discharge in Kenya. It is not in doubt that  the sugar originated  from Brazil and the inspection was done in Dubai solely to meet the PVOC requirements...

3) Certificate of origin

The certificate of origin from United Arab Emirates is not significant as United Arab Emirates is not known as a sugar producing country. The coo only becomes  relevant if  we  were · being  conferred· preferential tax rates like COMESA.

4) Change of ownership

The sugar has been under ownership of Darasa Investments Limited right form the port of loading as stated in item No. 1..."

[42] Albeit the explanation tendered, the 2nd appellant was not satisfied that the inconsistencies had been adequately addressed. The 2nd appellant communicated as much to the respondent  by a letter dated 22nd November, 2017 which is the subject of the judicial review proceedings.

[43] Whether or not the decision taken by the appellants in the said letter was wrong or right was not an issue that fell for consideration by the learned Judge. Similarly, we as the appellate court cannot delve into the same. Of concern, is whether the procedure adopted was in conformity with the rules of natural justice and  fair administrative  action  as  envisioned  under  Section  4(3)  of the  Fair Administrative  Action  Act.  Our  understanding  of the  issue  is  that the respondent's contention that it was not given an opportunity to be heard holds no water. It is common ground that such an opportunity was given to the respondent when it was asked to clarify the issues herein above stated.

[44]  We also find that the 2nd appellant's  letter dated 22nd November, 2017 did set out the reasons for the decision thereunder. It read in part:

"We have reviewed your submission in respect of the above  entry  against  the  provisions  of  the  Gazette Notice No. 9802 dated 4.10.2017 and have noted several inconsistencies relating to the date of loading, date and place of inspection, certificate of origin, change of ownership. These issues have not been satisfactorily addressed.

In light of the foregoing,  you are hereby  notified that the subject sugar consignment does not meet the provisions of the said Gazette  Notice."

We are guided by the sentiments of Githinji J.A in Judicial Service Commission vs. Mbalu Mutava  & Another [2015] eKLR thus,

"The duty to give reasons and the nature and extent of the reasons envisaged by Article 47(2) is dependent on the character and limits of the administrative discretion conferred on the administrator by the Constitution or law and its application to the facts of the case."

[45] Did the appellants take into account irrelevant considerations in determining whether  the respondent's consignment was subject of the exemption? The need to  take  into account  relevant considerations and ignore  irrelevant  facts  in  the decision  making has close nexus with the need to act reasonably. This much was appreciated  by Lord Greene MR  in Associated Provincial  Picture Houses Ltd vs. Wednesbury Corporation [1948] 1 KB 223 thus,

"For instance, a person entrusted  with discretion must, so to speak, direct himself properly in law. He must call his own attention  to matters which he is bound to consider.  He  must  exclude  from his  consideration matters which  are irrelevant . to  what he  has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting 'unreasonably'.

[46] By scrutinizing the requisite shipping documents the appellant cannot be said to have taken into account  irrelevant matters. These documents were essential  in establishing whether the consignment  had been shipped within the requisite  time frame. One of such requisite documents is a Bill of Lading. Apart from acting as a title to the goods specified thereunder, a Bill of Lading also acts as a receipt of the goods by the carrier, that is, acknowledgment that the goods in question have been received by the owner of the ship or his agent. See Schmitthof’s Export on trade, the law and practice of international trade, 11th Edition  at para 15-019. Consequently, the date on such a Bill of Lading is prima facie evidence of the date  the  goods  were  loaded  onto  a  vessel.  This  position  is  fortified  by Halsbury's  Laws of England, Volume  7 (2015) paragraph 317, The Saudi Crown  [19861  1 Lloyd's  Rep  261 and  J Aron  &  Co  One)  vs. Comptoir Wegimont  [1921] 3 KB 435.

[47] In this case, it is not in dispute that there were two sets of Bills of Lading issued on15th July, 2017 in Brazil and 17th October, 2017 in Dubai respectively.

This raised questions as to when the sugar consignment was loaded onto a vessel destined for Mombasa port. Was it on 15th July, 2017 or 17th October, 2017? This was further confounded by the Certificate of Conformity issued in Dubai on 19th  October, 2017 which indicated the date of production of the sugar in question as August and September, 2017. As matters stood, the date upon which the sugar consignment was loaded was uncertain. This is also discernible from a pertinent paragraph  of  the impugned  Ruling  where  the  Judge  appreciated  there  were disputed facts in regard  to the date when the sugar was loaded  into a vessel destined for a port in Kenya as per the Gazette Notice. This is what the Judge said in his own words;-

"Both parties seem to dispute  the period within which the sugar was loaded onto a vessel destined  to a port in Kenya. This is a significant issue in determining whether or not the consignment met the provisions of the Gazette Notice No. 4536 published on 12th May,  2017 as  amended  by  Gazette Notice  No.  9802 published  on 4th October,  2017. However, this  court  does not have expansive liberty  to entertain this issue as it goes beyond the realm of Judicial  Review proceedings. To delve deeply into this issue would be tantamount to addressing the merits and demerits of the decision made on 22nd November, 2017..."

[48] As the Judge readily accepted matters were disputed, and the decision being challenged was fundamentally to do with the date of loading of sugar for a port in Kenya, we find the Judge erred by proceeding to issue judicial  review orders on disputed  facts as the underlying dispute of whether the consignment of sugar was loaded between 12th May to 31st August as per the Gazette Notices remained unresolved.  We appreciate that under Section 107(1) of the Evidence Act, whoever  desires  any  court to give  judgment  as  to any  legal  right  or liability dependent  on the existence of facts which he asserts must prove  that those facts exist. In the absence of such proof, such in this case, rendered  the respondent's claim that it had shipped the consignment  within the exemption  period moot. See also Halsbury's Laws of England  Volume 12 (2015) para 702.

[49] We are also of the view that it has now become a settled principle that judicial review  remedies  are not available  in matters  where facts are disputed.  See the case  of Funzi  Island  Development  Ltd  & 2 Others  vs County  Council  of Kwale & 2 Others [2014] e KLR succinctly stated that-  .

"It is true  that generally speaking,  judicial review procedure is not well suited for resolving disputes on material  fact."

Karanja, JA in the aforementioned case also expressed  that-

"lt is common ground  that the subject matter  herein is property worth a substantial amount  of money. There  were also serious and  weighty arguments, for instance, whether the property in question was Trust  Land  or not; whether it was forest land or not; whether it formed part of Funzi Island or it formed  part of the foreshore which could not be set aside for allocation..

In my view, a matter such as this ought to have been fully heard as  a  civil  claim  where all the  parties would  have  had  an opportunity to bring  all their  legal ammunition in support of their  claim. That way, issues of fraud  as envisaged  under  the Registration  of Titles Act (RTA), and other disputed facts would have been fuiJy canvassed and conclusive determinations made on the same"

[50]  To the extent that the learned Judge despite cautioning  himself delved  deep into the evidence  to consider  letters dated  12th January,  2018 and 29th January, 2018 which  were authored  way after  the decision  contained  in the  letter  dated 22nd November, 2017 was made and during  the litigation, we find  that he acted beyond the scope of his jurisdiction. With tremendous  respect, he substituted the court's  own opinion of  the matter with  that  of  the  2nd  appellant or  the administrator for  that matter.  It is the 2nd appellant's mandate  to clear  goods according to the law, and unless it was established  there was a breach of the Jaw, impropriety or unreasonableness, the court cannot substitute its own opinion with that of the mandate holder.

[51] Even assuming that the said letters established that Anangel Sun left the port in Brazil in July, 2017 and was within the Kenya waters, they still did not address the inconsistencies with regard to when the respondent's consignment was loaded in a vessel destined for a port in Kenya according to the two Gazette Notices.  We hasten to add that in our view, those disputed facts were a good candidate for a normal court room trial where parties can conduct discovery, examination  and cross examination of witnesses.

[52] As the 2nd  appellant found that the respondent had not established  that the consignment had been shipped within the exemption period the issue of legitimate expectation could not arise.  In the text book by; POLLARD, PARPWORTH AND HUGHES writing at page 583 in the 4th edition of CONSTITUTIONAL AND ADMINISTRATEIVE LAW: TEXT WITH  MATERIAL  the learned authors posited as thus: -

"Legitimate expectation refers  to  the  principle  of good administration or administrative fairness that, if a public authority leads a person or body to expect that the public authority will, in the future, continue to act in a way either  in which it has regularly (or even always) acted  in the past or on  the basis of a past  promise  or statement which represents how it proposes to act, then, prima facie, the public authority should not,without  an overriding reason in the public interest, resale  from  that representation  and unilaterally  cancel the expectation  of the person  or  body that  the state  of affairs  will  continue.  This is of particular importance  if  an individual  has  acted on  the representation to his or her detriment".

Also In 4th Edition, Vol. 1 (1) at page 151, paragraph 81 of HALSBURY'S LAWS OF ENGLAND, legitimate expectation is outlined as follows: -

"A person may  have  a  legitimate expectation of being treated in a certain way by an administrative authority even  though he  has  no  legal  right in private law to receive such treatment.  The expectation may arise either from a representation or promise made by authority, including an implied representation, or from consistent past practice".

The promise made to the general public was that they had to import sugar and provide proof that the consignment of sugar was loaded in a vessel for a port in Kenya within the dates of 12th May, to 31st August, 2017. In the event that the 2nd appellant found the respondent did not provide clear evidence of the time of loading, it follows there was no legitimate expectation.

[53] Finally, there was no evidence that the appellants subjected the respondent to differential treatment or discrimination by allowing the consignment of sugar belonging to the other 13 companies who were subject to the amended Gazette Notice to be cleared duty free without complying with the condition attendant thereto. This is for the simple reason that there was no evidence to show that the documents presented by the other 13 importers had the same inconsistencies as those presented by the respondent.

[54] Based on the foregoing, we find that the learned Judge erred in holding that the appellants' decision was unreasonable, unlawful and procedurally deficient. Accordingly, the appeal herein has merit and is hereby allowed. We hereby set aside the orders issued by the learned Judge in the ruling dated 22nd February, 2018  and  substitute  the  same  with  an  order  dismissing  the  respondent's application.

[55] Owing to the nature of this matter where members of public were invited to import  sugar  to respond  to a national  drought,  we direct  each  party to bear its own costs both in the High Court and in this appeal.

Dated and delivered at Mombasa this 11th day of April, 2018

ALNASHIR  VISRAM

........................................

JUDGE OF APPEAL

 

W.KARANJA

.....................................

JUDGE OF APPEAL

 

M. K. KOOME

.....................................

JUDGE OF APPEAL

I certify that this is a true copy of the original

DEPUTY REGISTRAR

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