High Court declares the affordable housing levy unconstitutional
Headnote: The petition challenged various provisions of the Finance Act, 2023to be unconstitutional. Among the provisions challenged was section 84 that introduced the housing levy. The High Court declared that the introduction of the housing levy through amendment of the Employment Act by section 84 of the Finance Act, 2023 lacked a comprehensive legal framework in violation of articles 10, 201, 206 and 210 of the Constitution. The imposition of the housing levy against persons in formal employment to the exclusion of other non-formal income earners to support the national housing policy was without justification, unfair, discriminatory, irrational, and arbitrary and in violation of articles 27 and 201 (b)(i) of the Constitution.
Okoiti & 6 others v Cabinet Secretary for the National Treasury and Planning & 3 others; Commissioner-General, Kenya Revenue Authority & 3 others (Interested Parties) (Petition E181, E211, E217, E219, E221, E227, E228, E232, E234, E237 & E254 of 2023 (Consolidated)) [2023] KEHC 25872 (KLR) (Constitutional and Human Rights) (28 November 2023) (Judgment)
Neutral Citation: [2023] KEHC 25872
High Court at Nairobi
DAS Majanja, CW Meoli, and LN Mugambi, JJ
November 28, 2023
Reported by John Ribia
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Statutes – Bills – classification of Bills – Money Bills – definition of Money Bills – nature of Finance Act – whether the Finance Bill was a Money Bill – Constitution of Kenya, 2010, article 114
Finance Law – public finance – national budget – content – estimates of revenue and expenditure - Appropriation Bill - whether estimates of revenue and estimates of expenditure that were included in the Appropriation Bill were part of the budget making process - whether estimates of revenue and estimates of expenditure were included in the Appropriation Act, 2013 in accordance with the Constitution and the Public Finance Act - Constitution of Kenya, 2010, articles 220, and 221

Constitutional Law – legislature – legislative process – requirement that Bills touching on counties must be tabled before both the National Assembly and the Senate - concurrence of speakers of the National Assembly and Senate when tabling Bills that touched on counties - Finance Bill – nature of Finance Bill - whether the Finance Bill was a bill that concerned counties and as such required to be tabled before the Senate - whether the lack of concurrence of the speakers the National Assembly and the Senate as regarding whether a bill concerned counties so as to be tabled before the Senate ousted the jurisdiction of the High Court to interrogate such concurrence –- Constitution of Kenya, 2010 articles 96(2), 109, 110, 111, 112, and 113.

Statutes – interpretation of statues – interpretation of articles 209(2) and 209(3)(c) of the Constitution- whether the term “parliament” as used in articles 209(2) and 209(3)(c) of the Constitution. referred to both houses of Parliament

Jurisdiction – jurisdiction of the High Court – jurisdiction of the High Court to determine the validity or constitutionality of a statute – jurisdiction to determine whether a Bill concerned counties and as such required to be tabled before the Senate – where the speakers of the National Assembly had failed to get concurrence of the Speaker of the Senate before tabling the Finance Bill before the National Assembly - whether the failure by the Speaker of the National Assembly to seek concurrence from the Speaker of the Senate prior to the introduction of Finance Bill to the National Assembly vitiated the resultant Finance Act - Constitution of Kenya, 2010 article 165

Constitutional Law – national values and principles of governance – public participation – principles guiding the conduct of public participation – duties of the National Assembly when conducting public participation – challenge on the legality of the Finance Act on grounds of lack of adequate public participation - whether the National Assembly undertook adequate public participation before passing the Finance Act - whether the National Assembly when conducting public participation for a Bill was under the obligation to give written reasons for adopting or rejecting any proposals received from members of the public concerning the Bill - whether the National Assembly was precluded from effecting amendments to a Bill without conducting public participation on the said amendments - Constitution of Kenya, 2010 articles 10 and 118; The National Assembly Standing Orders, orders 132 and 133

Constitutional Law – devolution – functions of the National Government vis-à-vis county governments – imposition of taxes on entertainment (digital monetization) – imposition of taxes on winnings from betting, gaming, and lotteries - whether the imposition of taxes on entertainment (digital monetization) by the National Assembly was unconstitutional as it was a function of the county government – whether the imposition of taxes on betting, gaming and lotteries by the National Assembly was unconstitutional as it was a function of the county government - Constitution of Kenya, 2010 fourth schedule, part 2, paragraph 4.

Constitutional Law – fundamental rights and freedoms – limitation of fundamental rights and freedoms - freedom against discrimination - labour rights - whether section 84 of the Finance Act, 2023 that introduced the housing levy was discriminatory to salaried workers in formal employment for imposing a disproportionate tax burden on one group of earners without justification – whether the provision levy limited labour rights without justification - Constitution of Kenya, 2010 articles 10, 24, 27(4), 201, 206 and 210; Finance Act, 2023 section 84

Tax Law – categorization of taxes – levies – constitutionality of levies - whether a levy was one of the taxes envisaged under the Constitution - Constitution of Kenya, 2010 article 209(a)

Constitutional Law – public finance – public funds – provisions of the law delineating taxes or revenue collected by government to specific funds – where the housing levy had no corresponding public fund - whether ring-fencing of revenue collected in a tax by stating the purpose of the tax without a corresponding legal framework was sufficient to allow depositing of the revenue collected from the tax into a public fund - whether the housing levy could be paid into a public fund when there was no provision of law connecting the levy to a public fund - Constitution of Kenya, 2010 articles 201, and 206(1)(a); Finance Act, 2023 section 84

Tax Law – Kenya Revenue Authority – mandate to collect taxes –types of taxes that KRA had the power to collect – mandate of the Cabinet Secretary Finance to amend Part I and II of the First Schedule to the Finance Act that listed the types of taxes KRA could collect - housing levy - where the Cabinet Secretary, Ministry of Lands, Public Works, Housing and Urban Development granted KRA authority to collect the housing levy - whether the Kenya Revenue Authority had the legal authority under the Kenya Revenue Authority Act or any other legislation to collect the housing levy - whether the Cabinet Secretary, Ministry of Lands, Public Works, Housing and Urban Development had the authority to appoint the Kenya Revenue Authority (KRA) to collect the housing levy - Constitution of Kenya, 2010 articles 201, and 206(1)(a); Kenya Revenue Authority Act section 5, first schedule parts I and II; Finance Act, 2023 section 84

Words and Phrases– incidental – definition - subordinate to something of greater importance; having a minor role - Blacks Law Dictionary 9th edition

Words and Phrases – levy – definition - the imposition of a fine or tax; the fine or tax imposed; to impose or assess (a fine or tax) by legal authority - Black’s Law Dictionary, 9th Edition, page 991

Words and Phrases – tax – definition - a charge, usually. monetary, imposed by the government on persons, entities, transactions, or property to yield public revenue - Black’s Law Dictionary, 9th Edition, page 1594

Brief Facts:
The petitioners contested sections 76, 77, 78, 82, 83, 84, 85, 86, 87, 88, 89, 90-102 of the Finance Act which amended various legislations, on the ground that they watered down the character of the Finance Act as a money Bill..
The petitioners contended that the Appropriation Bill, 2023 that was tabled before the National Assembly did not contain estimates of revenue hence the budget was incomplete, and the resultant Finance Act was unconstitutional.
The petitions before the court were grounded on the alleged failure by the National Assembly to seek the concurrence of the Speaker of the Senate on the Finance Bill. They argued that the Bill concerned counties because it contained provisions affecting the functions and powers of county governments as envisioned in article 110(1) of the Constitution making it imperative for the Senate to participate in the legislative process.
The petitioners assailed the Finance Act on the ground that there was inadequate public participation. The petitioners also complained that some of the submissions by members of the public were rejected without giving reasons. The petitioners complained that the National Assembly incorporated into the Bill 18 additional amendments whose proposals were not subjected to public participation.
The specific provisions challenged may be summarized as follows:
  1. the petitioners challenged section 2 as read with section 21 of the of the Finance Act for amending section 35 of the Income Tax act as unconstitutional for imposing taxes on entertainment, which they contended was a function of county government.
  2. The petitioners challenged the Finance Act on the ground that it includes tax on ‘winnings’ from betting, gaming and lotteries which they contended fell within the powers and functions of the county governments.
  3. Section 33 of the Finance Act amended Section 17 of the VAT Act to introduce 16% VAT on insurance compensation. The Petitioners argued that insurance compensation was not income and was therefore not subject to taxation.
  4. Part IV of the Finance Act, sections 40 to 48 introduced amendments to section 2, sections 20, 28, 40, the First and Second Schedules and added sections 36(1)(a) and 36A of the Excise Duty Act. The petitioners complaint was that the requirement was unreasonable.
  5. The petitioners contended that Finance Act, 2023 that introduced the housing levy was unconstitutional on grounds that it was not contemplated in the Constitution, there was no legal framework for the levy, the fourth schedule to the Constitution limited the national government’s functions in relation to matters housing to development of a housing policy and no more; and lastly that the Employment Act already obligated employers to provide housing for employees and that the imposition of the levy amounted to double taxation and is a form of regressive discriminatory tax that imposed a disproportionate tax burden on one group of earners without justification and that levies were not envisaged under the Constitution as a type of tax.
Issues:
  1. Whether the Finance Bill was a money Bill in terms of article 114 of the Constitution.
  2. Whether estimates of revenue and estimates of expenditure that were included in the Appropriation Bill were part of the budget making process.
  3. Whether estimates of revenue and estimates of expenditure were included in the Appropriation Act in accordance with the Constitution and the Public Finance.
  4. Whether the Finance Bill was a bill that concerned counties and as such required to be tabled before the Senate.
  5. Whether the lack of concurrence of the speakers the National Assembly and the Senate as regarding whether a bill concerned counties so as to be tabled before the Senate ousted the jurisdiction of the High Court to interrogate such concurrence.
  6. Whether the failure by the Speaker of the National Assembly to seek concurrence from the Speaker of the Senate prior to the introduction of Finance Bill to the National Assembly vitiated the resultant Finance Act.
  7. Whether the term “parliament” as used in Article 209(2) and 209 (3)(c) of the Constitution. referred to both houses of Parliament.
  8. Whether the National Assembly undertook adequate public participation before passing the Finance Act.
  9. Whether the National Assembly when conducting public participation for a Bill was under the obligation to give written reasons for adopting or rejecting any proposals received from members of the public concerning the Bill.
  10. Whether the National Assembly was precluded from effecting amendments to a Bill without conducting public participation on the said amendments.
  11. Whether the imposition of taxes on entertainment (digital monetization) by the National Assembly was unconstitutional as it was a function of the county government.
  12. Whether the imposition of taxes on betting, gaming and lotteries by the National Assembly was unconstitutional as it was a function of the county government.
  13. Whether imposition and collection of tax by legislation of itself was a violation of the right to hold or own property.
  14. Whether section 33 of the Finance Act amended Section 17 of the VAT Act to introduce 16% value added tax (VAT) on insurance compensation was a violation of the right to hold or own property.
  15. Whether section 84 of the Finance Act, 2023 that introduced the housing levy was discriminatory to salaried workers in formal employment for imposing a disproportionate tax burden on one group of earners without justification.
  16. Whether section 84 of the Finance Act, 2023 that introduced the housing levy limited the labour rights without justification.
  17. Whether section 84 of the Finance Act, 2023 that introduced the housing levy was unconstitutional as the housing levy was not backed by any legal framework.
  18. Whether a levy was one of the taxes envisaged under the Constitution.
  19. Whether the housing levy could be paid into a public fund when there was no provision of law connecting the levy to a public fund.
  20. Whether ring-fencing of revenue collected in a tax by stating the purpose of the tax without a corresponding legal framework was sufficient to allow depositing of the revenue collected from the tax into a public fund.
  21. Whether the Kenya Revenue Authority had the legal authority under the Kenya Revenue Authority Act or any other legislation to collect the housing levy.
  22. Whether the Cabinet Secretary, Ministry of Lands, Public Works, Housing and Urban Development had the authority to appoint the Kenya Revenue Authority (KRA) to collect the housing levy.
Held:
  1. Article 114 of the Constitution provided for money bills. The pith and substance of the impugned legislation could be discerned by examining the purpose of the Bill. The object of the Finance Act, 2023 (the Act) was to amend the laws relating to various taxes and duties; and for matters incidental to them. It contained 102 sections amending existing laws on taxation and related matters, creating new taxes, charges and levies as revenue raising measures. Whether they fell within the definition of a money Bill depended on whether they related to taxes or are incidental to the proposed taxation measures in the Finance Act.
  2. Incidental meant subordinate to something of greater importance, something that had a minor role. Matters incidental to a money Bill must have a rational connection to the matters enumerated in article 114(3)(a), (b), (c), and (d) of the Constitution. The imposition, raising, reduction, variation of taxes may necessitate the amendment of other statutes. Hence the legislature, was permitted to include such changes in a money Bill.
  3. Certain amendments contained in the Finance Act were with respect to laws relating to taxes and duties, hence falling within the purview of the Finance Act. Those amendments were to:
    1. Tax Procedures Act, 2015 under part VI (sections 49- 67) of the Finance Act;
    2. Excise Duty Act, 2015 under part IV (sections 40-48) of the Finance Act;
    3. Income Tax Act under part II (sections 2-29) of the Finance Act;
    4. Value Added Tax Act, 2013 under part III (sections 30-38) of the Finance Act;
    5. Tax Appeals Tribunals Act, 2013 under part III (section 39) of the Finance Act;
    6. Betting, Gaming and Lotteries Act under section 75 of the Finance Act; Kenya Revenue Authority Act, 1995 under section 79-81 of the Finance Act, and;
    7. Miscellaneous Fees and Levies Act, 2015 under part VII (sections 68-74) of the Finance Act.
  4. The housing levy being a form of tax, its imposition would constitute a tax measure within the purview a money Bill. On application of the pith and substance test. the Finance Bill was a money Bill within the meaning of article 114 of the Constitution. However, it contained certain matters other than those listed in the definition of a money Bill in article 114(3). To the extent that those matters were extraneous to a money Bill they were unconstitutional.
  5. The budget making process was governed by article 220 and 221 of the Constitution as well as the Public Finance Management Act. Under article 220(1) and 221 the Cabinet Secretary responsible for finance was required, at least two months before the end of the financial year, to submit to the National Assembly, the estimates of revenue and estimates of expenditure of national government for the next financial year for tabling before the National Assembly. The estimates together with the estimates of the Judiciary and National Assembly were considered by the appropriate committee of National Assembly which made recommendations to the National Assembly. Under article 221(6) of the Constitution as when the estimates of the national government and estimates of expenditure for the Judiciary and Parliament had been approved by National Assembly, they were then included in the Appropriation Bill for introduction in the National Assembly to authorise withdrawal and appropriation of money needed for expenditure.
  6. Estimates of revenue and estimates of expenditure were part of the budget making process. Although the bill containing estimates of revenue was not tendered before the High Court, as part of the budget making process, the estimates of revenue were included in the approved estimates contained in the Appropriation Bill and the Appropriation Act 2023. The asserted procedural flaw allegedly arising from want of compliance with the requirement regarding estimates of revenue in the budget process was without foundation and was rejected.
  7. The Finance Bill 2023 was a money Bill within the meaning of article 114 of the Constitution. Thus, pursuant to article 109(5), it could only be introduced and considered in the National Assembly in accordance with article 114 because it dealt with amendment of laws relating to and imposition taxes under article 209 of the Constitution, which was a function of the National Government.
  8. The role of the Senate was limited to to considering, debating, and approving Bills concerning counties as provided in articles 109 to 113, thereby expressly excluding money Bills envisaged in article 114. Subject to article 96(2) and 114 of the Constitution the concurrence of the Speaker of the Senate was not required in respect of a money Bill.
  9. A money Bill was distinct, being neither special nor ordinary Bill concerning counties. Thus, it was not subject to the procedure in articles 110 to 112 of the Constitution, requiring concurrence of the two Speakers as a condition precedent and/or involvement of the Senate.
  10. Prior to either the National Assembly or the Senate taking up any Bill, it was desirable for both Speakers to determine the nature of the Bill and the path it should take. The two Speakers ought to have concurred as to the nature of the Bill prior to its introduction in the National Assembly. The concurrence of the two speakers of Parliament could not oust the jurisdiction of the High Court under article 165 of the Constitution to interrogate such concurrence.
  11. Public participation was the hallmark of constitutional democracy and manifestation of the peoples’ sovereignty. Article 10(2)(a) of the Constitution affirmed public participation as part of the national values and principles of governance that must guide all persons, state organs, state officers and public officers when making or implementing public policy decisions. Article 118 provided for participation by the people in the legislative process.
  12. The guiding principles for public participation were:
    1. public participation applied to all aspects of governance.
    2. The public officer and or entity charged with the performance of a particular duty bore the onus of ensuring and facilitating public participation.
    3. The lack of a prescribed legal framework for public participation was no excuse for not conducting public participation; the onus was on the public entity to give effect to the constitutional principle using reasonable means.
    4. Public participation must be real and not illusory. It was not a cosmetic or a public relations act. It was not a mere formality to be undertaken as a matter of course just to ‘fulfil’ a constitutional requirement. There was need for both quantitative and qualitative components in public participation.
    5. Public participation was not an abstract notion; it must be purposive and meaningful.
    6. Public participation must be accompanied by reasonable notice and reasonable opportunity. Reasonableness will be determined on a case to case basis.
    7. Public participation was not necessarily a process consisting of oral hearings, written submissions could also be made. The fact that someone was not heard was not enough to annul the process.
    8. Allegation of lack of public participation did not automatically vitiate the process. The allegations must be considered within the peculiar circumstances of each case: the mode, degree, scope and extent of public participation was to be determined on a case to case basis.
    9. Components of meaningful public participation included the following:
      1. clarity of the subject matter for the public to understand;
      2. structures and processes (medium of engagement) of participation that were clear and simple;
      3. opportunity for balanced influence from the public in general;
      4. commitment to the process;
      5. inclusive and effective representation;
      6. integrity and transparency of the process;
      7. capacity to engage on the part of the public, including that the public must be first sensitized on the subject matter
  13. Whether the public participation exercise was sufficient to meet the test above was a question of fact. The National Assembly invited citizens to submit and give comments on the Bill by way of letters to various stakeholders and newspaper advertisements. Secondly, the invitations indicated the venues of the public meetings and the manner of submission of written memoranda on the Bill. The National Assembly provided liaison officers for the meetings. The manner in which the National Assembly proposed to conduct the public participation was not only facilitative but also reasonable in the circumstances.
  14. The public participation exercise was real and not illusory or cosmetic because in response to the invitations, various members of the public and stakeholders gave their views and comments which were received by the Committee. The views of stakeholders and members of the public were considered as some proposals were adopted while others were rejected. The public participation exercise was real and gave diverse stakeholders an opportunity to present their views on the Bill.
  15. The enactment of Finance Act was a legislative process and in discharge of its legislative mandate, the National Assembly passed it. There was no express obligation on Parliament to give written reasons for adopting or rejecting any proposals received from members of the public. Nonetheless, in order to enhance accountability and transparency, it was desirable that the relevant committee, after conducting public participation gave reasons for rejecting or adopting proposals received.
  16. The National Assembly Standing Orders, 132 and 133 permit amendments to be made to a bill during the Committee stage. Once the National Assembly had heard the views of members of the general public and stakeholders on the Bill, it was not precluded from effecting amendments to the Bill during debate before it was passed, as a contrary position would amount to curtailing the legislative mandate of the National Assembly. The National Assembly was not required to re-submit the amendments to public participation on narrow issues that were within what was contemplated within the Objects and Memorandum of the Bill.
  17. The Finance Bill was a time-bound legislation, the public participation process conducted by the National Assembly was sufficient.
  18. The National Assembly had broad powers to levy tax as long as the power was not exercised in a manner that infringed or violated provisions of the Constitution; that is the process prescribed and the Bill of Rights.
  19. Tax laws were not enacted in a vacuum. They were the product of a process which was recognized in the Constitution. After formulation of policies underpinning the revenue and expenditure by the government, the legal process commences with National Treasury preparing the budget policy statement and submitting it to the Cabinet for approval pursuant to Public Finance Management Act. That culminates in presentation of the estimates of revenue and expenditure and the budget to the National Assembly for consideration and enactment of the Appropriations Act under article 220 and 221. Revenue raising measures were provided for in the Finance Act which was a money bill recognized by article 114 of the Constitution.
  20. The Legislature’s authority to impose taxes was not unconstrained. Parliament could not exercise its power in an arbitrary fashion without any rational connection to a legitimate purpose. To permit the legislature to assert a contrary position would undermine the national values and principles of rule of law, good governance, accountability and transparency.
  21. Digital monetization was introduced in section 2 as a tax on payments for entertainment, social, literal, artistic, educational or any other material electronically through any medium or channel. Such payment was treated as income and a person paying a non-resident or a person not having a permanent establishment was required to pay withholding tax on the payment. The purpose of the amendment was to clarify the type of income to be taxed. It was a tax on income which the national government was authorized to impose under article 209(1)(a) of the Constitution. That did not affect the powers and functions of the county government
  22. Digital asset tax introduced by section 2 of the Finance Act was payable by a person on income derived from the transfer or exchange of digital assets for example, crypto-currency. That was a tax on income and the manner in which it was charged and collected was within the purview of article 209(1)(a) of the Constitution.
  23. Finance Act amended section 2 of the Income Tax Act to define ‘winnings’ as the payout from a betting, gaming, lottery, prize competition, gambling or similar transaction under the Betting, Lotteries and Gaming Act, excluding the amount staked or wagered in that transaction. That section was to be read with section 10 of the Income Tax Act which stated that “winnings” constituted income accrued in or derived from Kenya and were subject to income tax. The purpose of the amendment was to clarify the definition of the term “winnings”. That was plainly income within article 209(1)(a) of the Constitution and did not affect the powers and functions of the county governments
  24. Section 26 of the Finance Act amended the third schedule to the Income Tax Act to introduce new tax bands. Section 7 of the Act amended section 10 of the Income Tax Act relating to withholding tax. The petitioners had not demonstrated how those amendments affected specific provisions of the Constitution. Those were matters related to tax policy and administration.
  25. Imposition and collection of tax by legislation of itself was not a violation of the right to hold or own property. Section 33 of the Finance Act amended Section 17 of the VAT Act to introduce 16% value added tax (VAT) on insurance compensation. That amendment only applied to persons who had claimed input VAT on supplies and who subsequently received compensation inclusive of VAT and were required to declare the VAT component. The tax was administrative measure and did not violate article 40 of the Constitution.
  26. Part IV of the Finance Act, sections 40 to 48, introduced amendments to section 2, 20, 28, 40, the first and second schedules and added sections 36(1)(a) and 36A of the Excise Duty Act. That was a tax administration measure designed to ensure that excise duty was collected and accounted for. There was no justification to intervene.
  27. Other grounds upon which the respondents assailed the. The petitioners had not demonstrated how provisions on excise duty that contained changes in tariff headings and rates of taxation on various products violated the Constitution.
  28. The effect of the amendment of the Employment Act by section 84 of the Finance Act to create the housing levy or tax was to add sections 31B and 31C to the Employment Act. The amendment was in three parts, the first part imposed a levy on the employer and employee, the second part stated the purpose of, and ring-fenced it, while the third part imposed on the employer the obligation to deduct, collect, and remit the levy and provides a sanction for non-compliance.
  29. The term levy meant the imposition of a fine or tax. The word tax meant a charge, usually. monetary, imposed by the government on persons, entities, transactions, or property to yield public revenue. The term embraced all governmental impositions on the person, property, privileges, occupations, and enjoyment of the people, and included duties, imposts, and excises.
  30. Housing was a shared responsibility between the national and county governments where each level of government had defined roles to play. The purpose of the housing levy was to support the national policy on affordable housing. The petitioners had not demonstrated how the policy interfered with the functions of the county governments.
  31. The amendment in the Employment Act did not set out either on its face or by reference to other legislation how the stated purpose was to be achieved. It was not open to the respondents to supply those details through responses; the enactment ought to address the details and speak for itself.
  32. Article 210 of the Constitution contemplated a comprehensive taxation law without which it was virtually impossible to determine whether and how the imposition of the levy would impact upon the shared function of housing or whether it would restrict or limit the functions and powers of the county governments under part 2 of the fourth schedule of the Constitution.
  33. Section 84 of the Finance Act (housing levy) had shortfalls that negated the national values and principles of governance that encompassed components of the rule of law, good governance, transparency and accountability among others.
  34. Although section 84(3) of the Finance Act provided that the housing levy shall not be used for any other purpose other than development of affordable housing, associated social physical infrastructure as well as provision of affordable home financing to Kenyans, that pronouncement was not anchored by a corresponding legal mechanism demonstrating how that objective would be actualized. That was unlike the other levies cited by the respondents which were collected for a specific purpose and were anchored on legal frameworks that governed them.
  35. Section 84 of the Finance Act did not set out how the levy would be administered once it was collected. More importantly, the legislation did not state how it supported the housing policy function of the national government. That concern was not idle as the manner in which money was administered and spent may encroach on the powers and functions of the county government.
  36. Without a framework embedded in legislation, the members of the public would not know the beneficiaries of the housing levy. That opaqueness undermined transparency and accountability. Section 84 of the Finance Act did not meet the good governance test required by article 10(2)(a) and (c) of the Constitution in the absence of a clear-cut legal framework concerning the administration of the funds.
  37. Under article 206 of the Constitution all money raised or received by or on behalf of the national government must be paid into the consolidated fund except money that was set out in article 206(1)(a) and (b) which was money that was reasonably excluded from the Fund by an Act of Parliament and payable into another public fund established for a specific purpose; or may, under an Act of Parliament, be retained by the State organ that received it for the purpose of defraying the expenses of the State Organ. Money earmarked and collected for a purpose must be paid over into a public fund established for that purpose by legislation. The housing levy could not be paid into a public fund unless there was a provision of the law connecting the levy to a public fund created under article 206(1)(a) of the Constitution. No such provision exists in Section 84 of the Finance Act or in any other law.
  38. Section 7 of the Housing Act establishing the National Housing Development Fund (NHDF) did not reference the housing levy as a source of funding. Section 7(3) of the Housing Act, provided in part, that there shall be paid to the Corporation and carried to the NHDF all such moneys as may from time to time be voted or appropriated by Parliament for payment into the National Housing Development Fund. There was no requirement in the section to the effect that the moneys collected as the housing levy were ring-fenced for the NHDF or any other fund. Ring-fencing of funds by stating their purpose was, of itself, insufficient as a legal framework for the intended purpose was pertinent, and merely ring-fencing was contrary to article 206 (1) and to the principles of public finance in article 201 of the Constitution.
  39. Section 5 of the Kenya Revenue Authority (KRA) Act empowered KRA to collect taxes under specific legislation set out in Part I and II of the First Schedule. Under the Act, the ‘Minister’ (Cabinet Secretary) meant, “the Minister (Cabinet Secretary) responsible for Finance. The housing levy was not one of the taxes KRA was empowered to collect. It was Cabinet Secretary for Finance who was permitted to amend the schedule to authorize KRA to collect a specific tax. The notice issued by KRA informing the public that it had been appointed by the Cabinet Secretary, Ministry of Lands, Public Works, Housing and Urban Development to collect the housing levy did not have any legal basis under the KRA Act.
  40. Public Finance Management Act permited the Cabinet Secretary Finance, to designate in writing persons as receivers of national government revenue. It was therefore not possible for the Cabinet Secretary for Ministry of Lands, Public Works, Housing and Urban Development to authorise collection of a levy which constituted a tax under article 209 of the Constitution. KRA was not entitled to collect the housing levy merely on the ground that it was entitled to charge commission on amounted collected in accordance with section 16(10)(ba) of the KRA Act. The authority to collect must be issued by the Cabinet Secretary for Finance.
  41. The framework for the housing levy legislated by section 84 of the Finance Act did not meet the requirements of articles 201, 206(1), 210 of the Constitution and the principles of good governance, transparency and accountability required by article 10 (2)(a) and (c) of the Constitution.
  42. The High Court did not purport to prescribe the form of the legal framework to be adopted by the National Government. The High Court’s concert was that the impugned provision imposed the housing levy and stated its purpose, and no more. The national government was required to demonstrate a rational connection between the purpose of legislation and the means by which that purpose was achieved. Section 84 of the Finance Act was not the kind of legal framework contemplated by articles 10, 201, 206 and 210 of the Constitution.
  43. Article 201(b)(i) of the Constitution embraced the principle of fairness in taxation. In imposing taxes, there would be distinctions between classes of taxpayers but the principle of fairness in taxation requires that the distinctions must be justified as being rationally related to a legitimate government purpose. The requirement prevented arbitrariness which undermined the rule of law. If distinctions were to be made, there had to be a rational basis for them.
  44. For any legislation or tax to pass the rule of law test, it had to have a rational connection to a legitimate government purpose otherwise the legislation or tax would be arbitrary and therefore unconstitutional. It was the duty of the State to provide the rational explanation for the manner in which the tax was imposed.
  45. In the absence of a rational explanation for the manner in which the housing levy was enacted, the respondents took the easy path of least resistance because collecting taxes from employees in formal employment was easier. It was the respondents’ constitutional responsibility to create a broad-based, efficient, and fair tax system that complied with article 201 (b)(i) of the Constitution. The taxation levied against persons in formal employment to the exclusion of all other non-formal income earners to support the national housing policy was without a clear justification was unfair, discriminatory, irrational and arbitrary, in violation of articles 27 and 201 (b)(i) of the Constitution. Section 84 of the Finance Act, 2023 was unconstitutional
  46. While the petitioners had not demonstrated how the housing levy directly affected the salaries and benefits of protected State Officers and how it violated the intent of articles 160(4) and 250(8) of the Constitution. Article 210(3) of the Constitution provided that no law could exclude or authorize exclusion of a State Officer from payment of tax. The housing levy was a general tax that applied generally to taxpayers in formal employment.
Petition partly allowed.
Orders: -
  1. Sections 76 and 78 of the Finance Act, 2023 amending section 7 of the Kenya Roads Act, 1999; section 87 of the Finance Act, 2023 amending Section 28 of the Unclaimed Assets Act, 2011 and 88 and 89 of the Finance Act, 2023 which repealed section 21 of the Statutory Instruments Act wre unconstitutional, null and void.
  2. A declaratory order was issued that section 84 of Finance Act, 2023 violated article 10(2)(b) and (c) and 201 of the Constitution and was unconstitutional, null and void.
  3. An order of prohibition was issued prohibiting the respondents from charging, levying or in any way collecting tax, otherwise known as the ‘Affordable Housing Levy’ on the basis of the section 84 of Finance Act, 2023.
  4. All other prayers in the consolidated petition not specifically granted were dismissed.
  5. Each party was to bear its own costs.


Kenya Law
Case Updates Issue 027/23-24
Case Summaries

EVIDENCE LAW

The law as regards sentence of a fine for trafficking narcotic drugs should be amended to be determined through the system of weighing the drugs

Headnote: The appeal was against the appellants’ convictions and sentences in respect of the offence of trafficking in narcotic drugs. The court noted that the sentence of a fine to be imposed upon a convicted person depended on the value of the narcotic drugs. The court further noted that the sources of the investigating officer’s own valuation was from informants (informers) and intelligence. The court thus held that the evidence as regards the monetary value of the narcotic drugs was inadmissible hearsay evidence. The court further held that the prosecution should have called the informant and the intelligence officers as witnesses to testify as to the value of the narcotic drugs. The court recommended that the law as regards sentence of a fine for trafficking in narcotic drugs be amended to be determined through the system of weighing the narcotic drugs.

Ali & another v Republic (Criminal Appeal E051 of 2021) [2023] KEHC 2501 (KLR) (Crim) (20 March 2023) (Judgment)
Neutral citation: [2023] KEHC 2501 (KLR)

High Court at Nairobi
JM Bwonwong'a, J
March 20, 2023
Reported by Kakai Toili

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Evidence Law – admissibility of evidence – admissibility of evidence from informers and intelligence officers - whether the evidence of the monetary value of the narcotic drugs from informers and intelligence officers who did not testify in court was admissible - whether informer privilege was absolute.
Criminal Law – sentences - sentencing discretion of a trial court - under what circumstances could an appellate court interfere with the sentencing discretion of a trial court - what were the purposes of issuing sentences.

Brief facts:
The instant appeal was against the appellants’ convictions and sentences of thirty-five years imprisonment and in addition to a fine of Kshs 37, 350,000 in default one-year imprisonment as decreed by section 28 of the Penal Code (Cap 63) Laws of Kenya, in respect of the offence of trafficking in narcotic drugs contrary to section 4(a) of the Narcotic Drugs and Psychotropic Substances (Control) Act No 4 of 1994.
The prosecution’s evidence was that the police acting on information from an informer, they intercepted a motor vehicle carrying the narcotic drugs and arrested the appellants, who were the occupants of the vehicle. The 1st appellant testified that he was offered a job to drive the vehicle from Bute to Nairobi by his friend, his friend told him that the owner of the vehicle needed a driver. He further testified that he did not know what the vehicle was carrying. He checked the inside of the vehicle and there was nothing. The 1st appellant asked the 2nd appellant to accompany him to Nairobi for the trip. The 1st appellant testified that he was driving the vehicle to Nairobi to deliver it to the owner.
The appeal was based on among other grounds; that the trial court erred in law and fact by imposing a thirty five (35) years sentence and a fine of Kshs 37, 350,000 in default to serve one year imprisonment which was harsh and manifestly excessive; and that the trial court erred in law and fact in convicting and sentencing the appellants notwithstanding that the evidence tendered by the prosecution witnesses read and analysed together pointed to perpetration of the crime by persons other than the appellants.

Issue:

  1. Whether the evidence of the monetary value of the narcotic drugs from informers and intelligence officers who did not testify in court was admissible .

  2. Under what circumstances could an appellate court interfere with the sentencing discretion of a trial court ?

  3. What were the purposes of issuing sentences ?

  4. Whether informer privilege was absolute. Read More..

Held:

  1. The 1st appellant was in control of the subject motor vehicle. He knew what he was carrying, which was to be delivered to Nairobi; since he checked the inside of the motor vehicle, before departure. The 1st appellant was conveying the consignment of the drugs to Nairobi. An accused person may commit the offence of trafficking by proving any one of the modes of commission as specified in the definition section of the Narcotic Drugs and Psychotropic Substances (Control) Act. Proof of one element such as sale, buying or supplying amounts to trafficking in narcotic drugs. All the ingredients of trafficking in narcotic drugs were proved beyond reasonable doubt.
  2. The sentence of a fine to be imposed upon a convicted person depended on the value of the narcotic drugs. From the evidence of the investigating officer (PW4), the monetary value of the narcotic drugs depended upon market forces. Furthermore, the sources of his own valuation was from informants (informers) and intelligence. The evidence of PW4 as regards the monetary value of the narcotic drugs was inadmissible hearsay evidence.
  3. The prosecution should have called the informant as a witness to testify as to the value of the narcotic drugs. The prosecution should have also called as witnesses the intelligence officers as witnesses in relation to the value of the narcotic drugs. Intelligence sources only provided information for further investigations. If the intelligence could not be converted into admissible evidence, it could not be used in court as evidence due to the rule against hearsay evidence.
  4. PW4 testified that he was not ready to reveal the identity of his sources. Therefore, the monetary value of the narcotic drugs was not proved. That had definitely affected the sentence of the fine imposed upon the 1st appellant. Consequently, the court was unable to impose any sentence of a fine upon the 1st appellant in the absence of the monetary value of the narcotic drugs.
  5. In addition to a sentence of a fine, the penalty provision also provided for a sentence of life imprisonment. In that regard, the mitigation of the 1st appellant was that he was a first offender. He was the sole provider of his family of two children and a wife. The role of the 1st appellant was secondary for he only conveyed drugs of the owner of the motor vehicle. The drugs that were being conveyed was a huge quantity weighing 415,000 grams. There was need for a deterrent sentence and the need to have the 1st appellant reformed in view of his young age. Sentencing was a matter for the discretion of the trial court and an appeal court may only interfere if the trial court acted on a wrong principle or if it imposed a manifestly excessive sentence.
  6. The purposes of a sentence was to deter the offender, to separate offenders from society and to assist in rehabilitation of the offender. Among the principles of sentencing was a possibility that the offender may reform and become a law-abiding citizen. The court took into account the period the 1st appellant had been in custody in sentencing him as was mandatorily required of the court by section 333(2) of the Criminal Procedure Code (Cap 75) Laws of Kenya.
  7. The trial court imposed a manifestly excessive sentence in the circumstances of the case. The trial court in imposing the sentence of a fine was influenced by relying on inadmissible hearsay evidence of the value of the narcotic drugs multiply by three the times its value, which the court found was Kshs 37, 350, 000. The trial court erred in law to that extent. The defence of the 2nd appellant was plausible. In the circumstances, the prosecution failed to prove beyond reasonable doubt that he was trafficking in narcotic drugs.
  8. The court recommended that the law as regards sentence of a fine be amended to be determined through the system of weighing the narcotic drugs in grammes or kilogrammes. The current system of using the market value that was based on supply and demand would necessitate the usage of an extensive usage of undercover agents in order to have admissible evidence. The reason was that the use of informers would leave the prosecution with no option but to rely on inadmissible hearsay evidence, where informer privilege was claimed as was the position in the instant case.
  9. It was good investigation practice to use undercover agents, where the issue of the market value of narcotic drugs was involved. The usage of undercover agents apart from being expensive, may also necessitate the informers giving evidence in court especially where it was required to establish the innocence of the accused.
  10. The informer privilege was not absolute. It was for that reason that the practice of using undercover agents (police), although it was expensive was suitable in ascertaining the market price of the narcotic drugs. In a situation of that kind, the prosecution may find it unnecessary to claim informer privilege. Usage of undercover agents also had its own problems. In one reported case in New York state in the USA two undercover agents arrested one another in a sting operation.

1st appellant’s appeal against conviction dismissed; 2nd appellant’s appeal allowed.
Orders 

  1. The sentence imposed upon the 1st appellant was quashed and in its place a sentence of eleven years imprisonment to run from the date of his conviction was imposed.
  2. The conviction and sentence recorded against the 2nd appellant were quashed and he was set free unless he was held on other lawful warrants.

CIVIL PRACTICE AND PROCEDURE

An interested party cannot introduce new issues or go beyond the main parties’ case

Headnote: The instant applications  sought among other orders a conservatory order restraining the 1st, 5th, and13th respondents from implementing sections 18, 19, 20 and 71 of the National Social Security Fund (NSSF) Act, 2013 and stay of execution and/or implementation of the judgment by the Court of Appeal pending the hearing and determination of the appeals. The court held that the crucial or overriding interest in any matter before a court was that of the principal or primary parties. It was precisely for that reason that a party joined as interested party could not introduce new issues or go beyond the main parties’ case. The court also highlighted the principles to be considered in issuing interim orders.

Kenya Tea Growers Association & 2 others v National Social Security Fund Board of Trustees & 13 others (Petition (Application) E004 of 2023 & Petition E002 of 2023 (Consolidated)) [2023] KESC 42 (KLR) (Election Petitions) (16 June 2023) (Ruling)
Neutral citation: [2023] KESC 42 (KLR)

Supreme Court of Kenya
MK Koome, CJ, PM Mwilu, DCJ & V-P, MK Ibrahim, SC Wanjala & I Lenaola, SCJJ
June 16, 2023
Reported by Kakai Toili


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Civil Practice and Procedure – suits – parties to a suit – interested parties - whether an interested party in a suit could introduce new issues in a suit.
Civil Practice and Procedure – orders - interim orders - what were the principles to be considered in issuing interim orders - Supreme Court Act, No 7 of 2011, section 23A.

Brief facts:
Two appeals were lodged before the instant court against the Court of Appeal’s judgment at the instance of the County Pensioners Association (the 3rd applicant) and by the Kenya Tea Growers Association and Agricultural Employers Association (the 1st and 2nd applicants respectively). The 3rd applicant filed a notice of motion seeking orders inter alia that- a conservatory order be issued restraining the National Social Security Fund Board of Trustees (1st respondent), the Attorney General (5th respondent) and the Federation of Kenya Employers (13th respondent) and their respective agents, proxies or employees from implementing sections 18, 19, 20 and 71 of the National Social Security Fund (NSSF) Act, 2013 (the Act) pending the hearing and determination of its appeal.
The gist of the 3rd applicant’s motion was that; the Employment and Labour Relations Court (ELRC) held that the Act was unconstitutional and that subsequently, the Court of Appeal set aside the ELRC’s decision on the ground that the ELRC lacked jurisdiction to entertain the dispute. The 3rd applicant stated that its appeal raised arguable issues which included that; the Court of Appeal misconstrued articles 162(2)(a) and 165(3)(b)(d) and (5) of the Constitution of Kenya, 2010 (the Constitution) as far as the scope of the jurisdiction of the ELRC vis a vis the High Court was concerned. The 3rd applicant further argued that its appeal would be rendered nugatory unless the order sought was granted.
The 1st respondent opposed the 3rd applicant’s motion on the grounds that; the 3rd applicant lacked locus standi to lodge its appeal and motion; in that, having been joined as an interested party at the ELRC, it could not purport to take over the role of the primary parties by filing its appeal and the motion; furthermore, the 3rd applicant’s membership consisted of former employees of local authorities who were contributors to the Local Authorities Pension Trust (Laptrust) and that the Laptrust scheme was closed in 2012. The 1st respondent thus stated that the Act did not apply to the 3rd applicant nor to its contributors; and as such, the 3rd applicant had no conceivable interest or grievance it could pursue.
The 1st and 2nd applicants motion apart from seeking a similar order restraining the implementation of sections 18,19, 20 and 71 of the Act, as the 3rd applicant, the 1st and 2nd applicants sought stay of execution and/or implementation of the judgment by the Court of Appeal pending the hearing and determination of their appeal. They argued that their appeal was arguable as the Court of Appeal erred in assuming jurisdiction and determining the merits of the proceedings before the ELRC, which it had declared as null and void. They further argued that their appeal would be rendered nugatory because the implementation of the Act would impose a heavy and unbearable financial burden on its members and if their appeal succeeded, they would not be able to recover the contributions made.

Issues:

  1. Whether an interested party in a suit could introduce new issues in a suit.
  2. What were the principles to be considered in issuing interim orders?
    3. Read More..

Held:

  1. The 3rd applicant by a motion dated June 18, 2015 sought to be joined as an interested party at the ELRC. The 3rd applicant’s stake or interest in the proceedings before the ELRC, revolved around the implementation and constitutionality of the Act. The motion was allowed by the parties’ consent dated August 6, 2015 and filed in the ELRC on August 12, 2015. From a perusal of the 3rd applicant’s motion and appeal before the court, the aforementioned interest was the basis upon which it had lodged its motion and appeal therein.
  2. While Laptrust doors were closed in 2012 to new members, it had not been demonstrated that the scheme did not receive contributions on behalf of its existing members who were still in active service. Indeed, the 1st respondent admitted that Laptrust was still in existence. Therefore, the 3rd applicant possessed the same identifiable interest in the dispute which led to its admission at the ELRC in the matter at hand.
  3. The crucial or overriding interest in any matter before a court was that of the principal or primary parties. It was precisely for that reason that a party joined as interested party could not introduce new issues or go beyond the main parties’ case . Some of the primary parties in the proceedings at the ELRC, that was, the 1st and 2nd applicants had also lodged an appeal, Petition No E004 of 2023, which had been designated as the lead file with the consent of the parties. Perusal of the prayers/reliefs and the case advanced by the 3rd applicant in its appeal as well as its motion revealed that they were more or less in tandem with the 1st and 2nd applicants’ case and reliefs sought in their appeal and motion. As such, it could not be said that the 3rd applicant’s interests had gone over and above that of the primary parties.
  4. The 3rd applicant had not introduced a new issue that was either not canvassed before the superior courts below or did not arise from the impugned judgment. As to whether the 3rd applicant should have filed a review before the Court of Appeal as opposed to an appeal before the instant court, that issue would go to the merit of its appeal and ought to be addressed in the consolidated appeal.
  5. The court was guided by section 23A of the Supreme Court Act, which set out the court’s discretionary power to issue interim orders. The court was also mindful of the guiding principles in Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 others, SC Applic No 5 of 2014; [2014] eKLR. The principles in question being that the applicants should demonstrate that the consolidated appeal was arguable; the appeal would be rendered nugatory unless the orders sought were granted; and that it was in the public interest that the orders sought be granted.
  6. The Court of Appeal simply set aside the ELRC judgment on the ground that it lacked jurisdiction to entertain the matter. As such, the Court of Appeal did not issue a positive order capable of execution as defined by the Court of Appeal for East Africa in the case of Western College of Arts and Applied Sciences v Oranga & others [1976] KLR 63. In that, it did not order any party to do anything or to refrain from doing anything. Besides, to issue the stay would mean reversing or undoing the impugned judgment at that interlocutory stage or determining a key issue on jurisdiction and thereby prejudicing the pending appeal. Therefore, the 1st and 2nd applicants’ prayer for stay of execution or implementation of the impugned judgment could not issue at the interlocutory stage.
  7. With regard to the conservatory order restraining the implementation of sections 18,19,20 and 71 of the Act, the applicants had demonstrated that the consolidated appeal was arguable. In that, the issue of the jurisdiction of the ELRC vis a vis the High Court with regard to the dispute at hand was one that warranted the court’s consideration. Nonetheless, the applicants had not met the other two principles to warrant the conservatory order sought. The 1st and 2nd applicants did not deny the 1st respondent’s contention to the effect that their members had since complied with the Act.
  8. None of the applicants demonstrated that in the event the consolidated appeal succeeded that the contributions made to NSSF would be lost or inaccessible to the contributors or their beneficiaries. The interest of justice would be best served by hearing and determining the consolidated appeal on priority basis so as to settle the main dispute.

Applications dismissed.
Orders

  1. The 1st and 2nd applicants’ notice of motion dated March 2, 2023 and filed on March 3, 2023 was dismissed.
  2. The 3rd applicant’s notice of motion dated February 16, 2023 and filed on February 17, 2023 was dismissed.
  3. Costs of the motions to abide the outcome of the consolidated appeal.
  4. The consolidated appeal to be set down for hearing on a priority basis.

JURISDICTION

A party seeking to move the Supreme Court for an advisory opinion should first seek the advice of the Attorney-General

Headnote: The reference sought the Supreme Court’s advisory opinion on four issues. The Attorney-General raised a preliminary objection on among other grounds that the applicant failed to seek his advice before moving the court for an advisory opinion. The court noted that seeking the advice of the Attorney-General did not compromise the independence of a State organ and that after obtaining the advice the applicant was not necessarily bound by it, for the purpose of the court. The court held that as a matter of good practice and anchored on rule 53 of the Supreme Court Rules, the opinion of the Attorney-General should be sought. As advice of the Attorney-General was not sought, the court declined to exercise its discretionary jurisdiction to give an advisory opinion.

County Government of Nairobi v Attorney General (Reference 1 (E001) of 2021) [2023] KESC 65 (KLR) (Civ) (14 July 2023) (Advisory Opinion)
Neutral citation: [2023] KESC 65 (KLR)

Supreme Court of Kenya
PM Mwilu, DCJ & V-P, MK Ibrahim, SC Wanjala, NS Ndungu & W Ouko, SCJJ
July 14, 2023
Reported by Kakai Toili


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Jurisdiction – jurisdiction of the Supreme Court – jurisdiction to issue advisory opinions – requirement to seek the advice of the Attorney-General before seeking the Supreme Court’s advisory opinion - whether a party who intended to move the Supreme Court for an advisory opinion had to first seek the advice of the Attorney-General – whether the independence of a State organ which sought the advice of the Attorney-General before seeking an advisory opinion from the Supreme Court was compromised - whether the State organ was bound by the advice of the Attorney-General - Constitution of Kenya, 2010, article 156(1)(c); Supreme Court Rules, 2020, rule 53.

Brief facts:
By a reference dated July 15, 2021, the County Government of Nairobi (the applicant), sought the court’s advisory opinion under article 163(6) of the Constitution of Kenya, 2010 (the Constitution) on the following four issues:

  1. Whether the outstanding legal debt during the transition from the National Government to the devolved government as provided under sections 4 and 7 of the Transition to Devolved Government Act should have been absorbed by the National Government and not the County Government.
  2. Whether the transfer of functions from the County Government to the National Government vide the deed of transfer dated February 25, 2020 in terms of articles 187, 189 of the Constitution and sections 24, 25 and 28 of the Intergovernmental Relations Act should have also included the transfer of liabilities including the Kshs 60 billion owed in legal debt from the County Government to the National Government;
  3. Whether the county accounting officers should personally be held liable for the failure of the county governments to obey orders requiring payment of any money by way of damages or otherwise, or of any costs in legal debts.
  4. Whether the arrest warrants issued against county executive officers on account of failure to pay the legal debt owed by the County Government violated their rights under articles 27, 28, 29, and 48 of the Constitution.

The respondent, the Attorney-General raised a preliminary objection on among other grounds that the applicant failed to seek his advice before moving the court for an advisory opinion. It was urged that it was settled that a party who intended to move the court for an advisory opinion must first seek the advice of the Attorney-General. The Attorney-General submitted that despite the reference having been filed in the name of the applicant, which was a county government with the requisite locus standi to seek an advisory opinion, the applicant instructed its advocates to urgently withdraw the advisory opinion. The Attorney-General thus urged the court to decline to issue an advisory opinion on all the questions raised.

Issue:

  1. Whether a party who intended to move the Supreme Court for an advisory opinion had to first seek the advice of the Attorney-General.

  2. Whether the independence of a State organ which sought the advice of the Attorney-General before seeking an advisory opinion from the Supreme Court was compromised.

  3. Whether a State organ which sought the advice of the Attorney-General before seeking an advisory opinion from the Supreme Court was bound by the advice of the Attorney-General. Read More..

Relevant provisions of the law
Supreme Court Rules, 2020
Rule 53 - Determining a reference

(1) The court may, after giving the parties an opportunity to be heard, reject a reference in whole or in part, if—

(c) the matter in respect of which the reference is made can, in the opinion of the Court, be resolved by the advice of the Attorney-General, and such advice has not been sought;

Held:

  1. An objection that disputed the jurisdiction of a court of law was one raising a pure point of law. The respondent’s preliminary objection fell within those demarcations and warranted the court’s determination at that stage.
  2. Seeking the advice of the Attorney-General, or being required to do so by a rule of procedure, did not compromise the independence of a State organ in any way, nor did it vest a veto power in that office. While the applicant after obtaining advice from the office of the Attorney-General was not necessarily bound by the same, for the purpose of the court, the fact that such advice was sought in the first place, would demonstrate the applicant’s commitment, as well as fidelity to due process.
  3. There was no reason to derogate from the court’s rules and set procedure, as well as settled legal standards. As a matter of good practice and anchored on rule 53 of the Supreme Court Rules, the opinion of the Attorney-General should be sought. In line with rule 53(1)(c), the court may, after allowing the parties a chance to be heard, reject a reference in whole or in part, if the matter in respect of which the reference was made, could be resolved by the advice of the Attorney General if such advice had not been sought.
  4. The applicant had not sought the legal advice of the Attorney General. The applicant’s advocate on record was on various occasions, when the matter came up for compliance mentions, before the Deputy Registrar of the court, directed to seek the Attorney General’s advice. Similarly, when the matter first came up for hearing on November 25, 2021, the court took the liberty to grant an adjournment to allow the applicant to seek such advice. The court took judicial notice that regrettably, the reasons for non-compliance with those directions had not been provided. In addition, and curiously, neither a representative of the applicant nor its counsel appeared at the hearing of the reference leading to the judgment.
  5. Article 156(1)(c) of the Constitution provided that, the Attorney-General was the principal adviser of the Government. The issues raised in the advisory opinion revolved around the day-to-day operations of the two levels of Government and their departments. Moreover, how would the court issue an advisory on transfer of debts without any evidence of how they were arrived at? Those were matters for resolution, initially, through the advice of the Attorney-General and the determination of debts by competent courts, respectively.
  6. Primarily, as advice of the Attorney-General was not sought, the court invoked the provisions of rule 53(1)(c) of the Supreme Court Rules and the jurisprudence of the court referred to therein, and declined to exercise its discretionary jurisdiction to give an advisory opinion. In any event, the Attorney General had demonstrated that the applicant, by its letter dated October 4, 2021, copied to the Solicitor General, categorically instructed the applicant’s advocates to instantly withdraw the reference, on grounds that, as drafted, it exceeded its authority and/or instructions.
  7. The contents of the Attorney-General’s letter dated October 4, 2021 had not been controverted by the applicant in its written submissions. More alarming, its advocate on record failed to appear in court when the matter came up for hearing to explain why they chose the path leading to the judgment. Moreover, the letter was highlighted by the respondent when the reference first came up for hearing on November 25, 2021 and the applicant’s advocate did not dispute its contents, but only sought time to seek further instructions.
  8. The applicant ought to have initially sought the Attorney-General’s advice and the instant proceedings lacked the applicant’s authority. Consequently, it failed the test as to who could move the court for an advisory opinion and therefore the court declined to exercise its discretion or assume jurisdiction in the matter.

Preliminary objection upheld; reference dated July 15, 2021 and filed on July 19, 2021 struck out; each party to bear its costs.