Kamau & 35 others v Commissioner General, Kenya Revenue Authority & another (Constitutional Petition E161 of 2022) [2022] KEHC 10284 (KLR) (Constitutional and Human Rights) (14 July 2022) (Ruling)


1.The proceedings herein were instituted by persons, allegedly, engaged in the business of distributing and vending purified water to their customers.
2.The institution of these proceedings was prompted by a Notice issued by the Kenya Revenue Authority, the 1st Respondent herein, dated July 17, 2021 (hereinafter referred to as ‘the impugned notice’) calling for the Petitioners and all those in like business to obtain an Excise license and to comply with the corresponding tax obligations.
3.Aggrieved by the impugned notice, the Petitioners sought the Court’s intervention through the filing of a Petition and an application by way of a Notice of Motion both dated April 12, 2022.
4.The Petition and the application are both opposed.
5.The application was orally heard on May 26, 2022, hence, this ruling.
The Application:
6.The following orders are sought for in the application: -1.The application and annexed petition be certified urgent and be heard ex parte in the first instance.2.Pending the hearing and determination of this application interpartes, a Conservatory order be and is hereby issued restraining the 1st Respondent whether acting jointly or severally by themselves, their servants, agents, representatives or howsoever otherwise from the implementation. further implementation, administration, application and/or enforcement of the Public Notice issued on July 17, 2020 by imposing fines, seizing water refillers assets or requiring water refillers to obtain an excise license to operate a water refill shop.3.Pending the hearing and determination of this Petition, a Conservatory Order be and is hereby issued restraining the 1st Respondent whether acting jointly or severally by themselves, their servants, agents, representatives or howsoever otherwise from the implementation, further implementation. Administration, application and/or enforcement of the Public Notice issued on July 17, 2020 by imposing fines, seizing water refillers assets or requiring water refillers to obtain an excise license to operate a water refill shop.4.That pending the hearing and determination of the Petition and petition an order do issue reinstating the water tanks, water refilling machines and any other asset that the 1st Respondent has unlawfully seized in the enforcement of the impugned and unlawful Public Notice of July 17, 2020.5.That the costs of this application be granted.
7.The application was supported by two Affidavits sworn by Mary Wangui Mwangi, the 18th Petitioner herein. They were sworn on April 8, 2022 and May 22, 2022 respectively. It was further supported by the Petitioners’ List of Authorities.
8.The application was opposed by both Respondents.
Analysis:
9.I have carefully considered the application, the pleadings, the responses thereto, the parties’ submissions and the decisions referred to and I, hereby, discern the following areas of discussion:i.The nature of conservatory orders;ii.The guiding principles in conservatory applications; andiii.The applicability of the principles to the applications.
10.I will deal with the above sequentially.
11.Before I do so, I must state that due to time constraints, I will not reproduce the parties’ cases and submissions verbatim, but will definitely consider all what is on record. Needless to say, the parties’ oral submissions were well put forth and captured all the parameters of the application. Parties also referred to some judicial decisions.
The nature of conservatory orders
12.In Civil Application No. 5 of 2014 Gatirau Peter Munya -v- Dickson Mwenda Kithinji & 2 others (2014) eKLR, the Supreme Court discussed, at paragraph 86, the nature of conservatory orders as follows: -(86)“Conservatory orders” bear a more decided public-law connotation: for these are orders to facilitate ordered functioning within public agencies, as well as to uphold the adjudicatory authority of the Court, in the public interest. Conservatory orders, therefore, are not, unlike interlocutory injunctions, linked to such private-party issues as “the prospects of irreparable harm” occurring during the pendency of a case; or “high probability of success” in the Applicant’s case for orders of stay.
13.The Court in Nairobi Civil Appeal 151 of 2011 Invesco Assurance Co. Ltd vs. MW (Minor suing thro' next friend and mother (HW) [2016] eKLR defined a conservatory order as follows: -A conservatory order is a judicial remedy granted by the court by way of an undertaking that no action of any kind is taken to preserve the subject until the motion of the suit is heard. It is an order of status quo for the preservation of the subject matter.
14.In Judicial Service Commission vs. Speaker of the National Assembly & another [2013] eKLR the Court had the following to say about the nature of conservatory orders: -Conservatory orders in my view are not ordinary civil law remedies but are remedies provided for under the Constitution, the Supreme law of the land. They are not remedies between one individual as against another but are meant to keep the subject matter of the dispute in situ. Therefore, such remedies are remedies in rem as opposed to remedies in personam. In other words, they are remedies in respect of a particular state of affairs as opposed to injunctive orders which may only attach to a particular person.
15.Conservatory orders are, therefore, aimed at preserving the substratum of the matter pending the determination of the main issues in dispute.
16.Given the interlocutory nature of conservatory orders, it is argued, that there is need for a Court to exercise caution when dealing with any request for such prayers. I agree with that proposition for the reason that matters which are the preserve of the main Petition ought not to be dealt with finality at the interlocutory stage.
17.The foregoing was fittingly captured by Ibrahim, J (as he then was) in Muslim for Human Rights (Milimani) & 2 Others vs Attorney General & 2 others (2011) eKLR. The Learned Judge, correctly so, stated as follows: -The court must be careful for it not to reach final conclusion and to make final findings. By the time the application is decided; all the parties must still have the ability and flexibility to prosecute their cases or present their defences without prejudice. There must be no conclusivity or finality arising that will or may operate adversely vis-a vis the case of either parties. The principle is similar to that in temporary or interlocutory injunctive in civil matters. This is a cardinal principle and happily makes my functions and work here much easier despite walking a tight legal rope that I could easily lose balance with the slightest slip due to any laxity or being carried away by the passion or zeal of persuasion of any one side.
19.A Court, therefore, dealing with an application for conservatory orders must maintain the delicate balance of ensuring that it does not delve into issues which are in the realm of the main Petition. In this discourse, I will, therefore, restrain myself from dealing with such issues.
The guiding principles in conservatory applications
20.The principles for consideration by a Court in exercising its discretion on whether to grant conservatory orders have been developed by Courts over time. They are now well settled.
21.The locus classicus is the Supreme Court in Gatirau Peter Munya -v- Dickson Mwenda Kithinji & 2 others case (supra) where at paragraph 86 stated the Court stated as follows: -(86) …… Conservatory orders, consequently, should be granted on the inherent merit of a case, bearing in mind the public interest, the constitutional values, and the proportionate magnitudes, and priority levels attributable to the relevant courses.
22.In Board of Management of Uhuru Secondary School vs. City County Director of Education & 2 others [2015] eKLR, the Court summarized the principles for grant of conservatory orders as: -(i)The need for the applicant to demonstrate an arguable prima facie case with a likelihood of success, and to show that in the absence of the conservatory orders, he is likely to suffer prejudice.(ii)The second principle is whether the grant or denial of the conservatory relief will enhance the constitutional values and objects of a specific right or freedom in the Bill of Rights.(iii)Thirdly, the Court should consider whether, if an interim conservatory order is not granted, the petition or its substratum will be rendered nugatory.(iv)Whether the public interest will be served or prejudiced by a decision to exercise discretion to grant or deny a conservatory order.
23.In Wilson Kaberia Nkunja vs. The Magistrate and Judges Vetting Board and others Nairobi High Court Constitutional Petition No.154 of 2016 (2016) eKLR the Court summarized three main principles for consideration on whether to grant conservatory orders as follows: -(a)An applicant must demonstrate that he has a prima facie case with a likelihood of success and that unless the court grants the conservatory order, there is a real danger that he will suffer prejudice as a result of the violation or threatened violation of the Constitution.(b)Whether, if a conservatory order is not granted, the Petition alleging violation of, or threat of violation of rights will be rendered nugatory; and(c)The public interest must be considered before grant of a conservatory order.
24.The above principles are, however, not exhaustive. Depending on the nature of the matter under consideration, there may be other parameters which a Court ought to look into. Such may include the effect of the orders on the determination of the case, whether there is eminent danger to infringement of the human rights and fundamental freedoms under the Bill of Rights, the applicability of the doctrine of presumption of constitutionality of statutes, whether the Applicant is guilty of laches, the doctrine of proportionality, among many others.
The applicability of the principles to the application:
(i)A prima-facie case:
25.A prima facie case was defined in Mrao vs. First American Bank of Kenya Limited & 2 others (2003) KLR 125 to mean: -…. In a civil application includes but is not confined to a ‘genuine and arguable case’. It is a case which, on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the later.
26.In a ruling rendered on February 8, 2021in David Ndii & others v Attorney General & others [2021] eKLR, the Court had the following to say about a prima-facie case: -
45.The first issue for determination in matters of this nature, is whether a prima facie case has been established and a prima facie case, it has been held, is not a case which must succeed at the hearing of the main case. However, it is not a case which is frivolous. In other words, it has to be shown that a case which discloses arguable issues has been raised and in this case, arguable constitutional issues.
27.What constitutes a prima-facie case was further dealt with by the Court of Appeal in Mirugi Kariuki -vs- Attorney General Civil Appeal No. 70 of 1991 (1990-1994) EA 156, (1992) KLR 8. The Court, in an appeal against refusal to grant leave to institute judicial review proceedings by the High Court, stated as follows: -It is wrong in law for the Court to attempt an assessment of the sufficiency of an applicant’s interests without regard to the nature of his complaint. If he fails to show……. that there has been a failure of public duty, this court would be in error if it granted leave. The curb represented by the need for the applicant to show, when he seeks leave to apply, that he has a case, is an essential protection against abuse of the legal process. It enables this court to prevent abuse by busy-bodies, cranks and other mischief-makers... In this appeal, the issue is whether the applicant in his application for leave to apply for orders of certiorari and mandamus demonstrated to the High Court a prima facie case for the grant of those orders. Clearly, once breach of the rules of natural justice was alleged, the exercise of discretion by the Attorney General under section 11(1) of this Act was brought into question. Without a rebuttal to these allegations, this appellant certainly disclosed a prima-facie case. For that, he should have been granted leave to apply for the orders sought. (emphasis added).
28.In Re Bivac International SA (Bureau Veritas) (2005) 2 EA 43, the Court while expounding on what a prima-facie case or arguable case is, stated that such a decision is not arrived at by tossing a coin or waving a magic hand or raising a green flag, but instead a Court must undertake an intellectual exercise and consider without making any findings, the scope of the remedy sought, the grounds and the possible principles of law involved.
29.The Court of Appeal in Nairobi Civil Appeal No. 44 of 2014 Naftali Ruthi Kinyua vs. Patrick Thuita Gachure & another (2015) eKLR while dealing with what a prima facie case is, made reference to Lord Diplock in American Cyanamid vs. Ethicon Limited (1975) AC 396, when the Judge stated thus: -If there is no prima facie case on the point essential to entitle the plaintiff to complain of the defendant’s proposed activities, that is the end of any claim to interlocutory relief.
30.In sum, therefore, in determining whether a matter discloses a prima-facie case, a Court must look at the case as a whole. It must weigh, albeit preliminarily, the pleadings, the factual basis, the respective parties’ positions, the remedies sought and the law. In so doing, a Constitutional Court must be guided by Articles 22(1) and 258(1) of the Constitution which provisions are on the right to institute Court proceedings whenever a right or fundamental freedom in the Bill of Rights has been denied, violated or infringed, or is threatened or the when the Constitutionhas been contravened, or is threatened with contravention.
31.In the Petition, the Petitioners sought the following prayers: -a)A declaration that the Public Notice issued on July 17, 2020by the 1st Respondent is illegal, unlawful unconstitutional and contravenes the provisions of Article 10, 27, 47, 201(b)(i) and 210 (1) of the constitution and as such null and void ab initio:b)A declaration that the 1st Respondent classifying water refilling as manufacturing subject to the imposition of Excise Duty under Section 5 of the Excise Duty Act is unlawful and contravenes the provisions of Article 201(b)(i) and 210 (1) of the constitution and as such null and void ab initio:c)A declaration that the subsequent actions by the 1st Respondent in imposing the requirement of an excise license on water refillers is in contravention of Section 15 of the Excise Duty Act and the provisions of Article 201(b)(i) and 210 (1) of the constitution and as such null and void ab initio:d)A declaration that the Petitioners constitutional rights of having their property not arbitrary seized as guaranteed under Article 31(b) and 40 of the Constitution has been violated and infringed by the 1st Respondent.e)Reinstitution of the water tanks, water refilling machines and any other asset that the 1st Respondent has unlawfully seized in the enforcement of the impugned and unlawful Public Notice of July 17, 2020.f)General damages for illegal seizure, closing of the Petitioners shops and unlawful imposition of excise duty and fines on the Petitioners.g)An order of prohibition be and is hereby issued restraining the 1st Respondent whether acting jointly or severally by themselves, their servants, agents, representatives or howsoever otherwise from the implementation, further implementation, administration, application and/or enforcement of the Public Notice issued on July 17, 2020by imposing fines, seizing water refillers assets or requiring water refillers to obtain an excise license to operate a water refill shop.h)The costs consequent upon this Petition be provided for.i)Any other remedy or such other orders as this Honourable Court may deem just and expedient in the circumstances to remedy the violation of the Petitioners fundamental constitutional rights and freedoms.
32.The Petition challenged inter alia the constitutionality of both the impugned notice and the classification of the water refilling businesses as manufacturing subject to the imposition of Excise Duty.
33.The Respondents vehemently opposed the Petitioners’ positions. They contended that the water refilling businesses were manufacturing within the meaning of the Excise Duty Act and the Regulations made thereunder. They attempted to demonstrate how the Petitioners’ businesses were transformed from merely distributing and vending to manufacturing courtesy of Section 2 of the Public Health Act. The Respondents further contended that the impugned notice was constitutional.
34.There is no doubt that this matter is indeed contentious. It raises issues which call for further interrogation.
35.Going by the current state of the record and what a prima-facie case has been defined to mean, it is this Court’s finding that the matter raises a prima facie case.
ii. Whether the Petitioners will suffer prejudice and the case rendered nugatory unless the conservatory orders are granted
36.The Black’s Law Dictionary 10th Edition Thomson Reuters at page 1370 defines ‘prejudice’ as follows: -
Damage or detriment to one’s legal rights or claims.
37.Will any party, therefore, suffer any damage or detriment if the conservatory orders are not granted? Generally, any contravention or threat to contravention of the Constitutionor any infringement or threatened infringement of human rights and fundamental freedoms in the Bill of Rights is an affront to the people of Kenya. That is the express purport of the Preamble and Chapter 1 of the Constitution.
38.Courts must, in dealing with Petitions brought under the various provisions of the Constitution, be careful in determining the prejudice at least at the preliminary stages. I say so because, at such stages of the proceedings, the provisions of the Constitutionalleged to have been infringed or threatened with infringement are yet to be subjected to legal scrutiny.
39.As such, the damage or threat thereof to the rights and fundamental freedoms or to the Constitutionmust be so real that the Court can unmistakably arrive at such an interim finding. Such a breach or threat should not be illusory or presumptive. It must be eminent.
40.In impugning that any damage is likely to be visited upon the Petitioners, the Respondents posited that some of those in the Petitioners’ business had long complied with the Excise Duty Act. Reference was made to the fact that some had previously and formally admitted to charges under the Excise Duty Act and the offences thereof compounded. They paid the requisite fines and penalties.
41.It was the Respondents position that the Petitioners, having admitted and complied with the provisions of the law, cannot be allowed to approbate and reprobate on the very issue.
42.There is also the contention that one of the effects of the conservatory orders sought in the application is to suspend a legislation. To that end, the doctrine of presumption of constitutionality and legality of statutes was referred to.
43.The doctrine generally fronts that unless proved otherwise, statutes are deemed constitutional and valid and may only be suspended in the clearest of cases and where the statute is a threat to life and limb or to the Bill of Rights.
44.In Kizito Mark Ngaywa v. Minister of State for Internal Security and Provincial Administration & another [2011] eKLR, the High Court (Mohamed, J (as he then was) had the following to say on the issue: -I have considered the application for adjournment and that for temporary suspension of the regulations and the submissions by Counsel. When considering the matter, I recalled my decision in Petition No. 669 Of 2009, Mombasa Bishop Joseph Kimani & others –v- Attorney General, Committee Of Experts And Another which I delivered on 6-10-2010. In the said case I was guided by the decisions of the Constitutional Court in Tanzania in Ndyanabo –v- Attorney General (2001) 2 EA485 in which the said court presided over by the Hon. Chief Justice Samatta stated as follows: -Thirdly; until the contrary is proved, a legislation is presumed to be Constitutional. It is a sound privilege of Constitutional construction that if possible, a legislation should receive such a construction as will make it operative and not inoperative.Fourthly, since, as stated, a short while ago, there is a presumption of Constitutionality of legislation, the onus is upon those who challenge the Constitutionality of the legislation, they have to rebut the presumption. Fifthly where those supporting a restriction on a fundamental right rely on a claw back or exclusion clause in doing so, the onus is on them, they have to justify the restriction.”I am still persuaded by the above-mentioned principles of Constitutional interpretation. In the Bishop Joseph Kimani case, the court observed as follows: -It is a very serious legal and Constitutional step to suspend the operation of statutes and statutory provisions. The courts must wade with care, prudence and judicious wisdom. For the High Court to grant interim orders in this regard, I think one must at the interlocutory stay actually show that the operation of the legislative provision are a danger to life and limb at that very moment.It is my view that the principle of presumption of Constitutionality of Legislation in imperative for any state that believes in democracy, the separation of powers and the Rule of Law in general. Further the courts to be able to suspend legislation during peace times where there is no national disaster or war, would in my view be interfering with the independence and supremacy of Parliament in its Constitutional duty of legislating law.
45.The applicability of the doctrine of presumption of constitutionality and legality of a statute was further dealt with by the Court of Appeal alongside the aspect of public interest. That was in Attorney General & another v Coalition for Reform and Democracy & 7 others [2015] eKLR.
46.In the matter, the High Court had suspended some provisions of the Security Laws (Amendment) Act. The State appealed the decision. In dismissing the appeal, the Court of Appeal had the following to say:We agree with Prof. Muigai that in an application of this nature, which is not seeking entirely private law remedies, the Court must also consider where the public interest lies. In Planned Parenthood Of Greater Texas Surgical Health Services case, (supra), it was held that when the State is the appealing party in an appeal where the constitutionality of a statute is the subject matter for determination, the State interest and harm merges with that of the public. There is also the doctrine of presumption of constitutionality which must be borne in mind. The impugned Act is intended to serve the public.While the Court appreciates the contextual backdrop leading to the enactment of the SLAA, it must also be appreciated that it is not in the interest of justice to enact or implement a law that may violate the Constitutionand in particular the Bill of Rights. Constitutional supremacy as articulated by Article 2 of the Constitutionhas a higher place than public interest. When weighty challenges against a statute have been raised and placed before the High Court, if, upon exercise of its discretion, the Court is of the view that implementation of various sections of the impugned statute ought to be suspended pending final determination as to their constitutionality, a very strong case has to be made out before this Court can lift the conservatory order. The State would have to demonstrate, for example, that suspension of the statute or any part thereof has occasioned a lacuna in its operations or governance structure which, if left unfilled, even for a short while, is likely to cause very grave consequences to the general populace.We do not think that the applicant has made out such a case. The Court was not told that the grant of the conservatory orders has brought about a vacuum in our laws which makes it impossible or difficult to investigate and prosecute terror suspects or such other persons who may be targeted by the SLAA. Apart from the eight (8) sections of the SLAA whose operationalization has been temporary suspended, all other laws of Kenya are still in full operation. We entertain no doubt that as we await either the hearing of the appeal before this Court, or, the finalization of the petitions before the High Court, the country’s security agents and law enforcement organs can still make full use of the existing laws to keep the country and its people safe.
47.In this case, the Respondents contended that the Petitioners have not demonstrated any irreparable prejudice which they stand to suffer neither have they demonstrated a case for the suspension of the law.
48.Have the Petitioners demonstrated a real threat to life and limb or infringement of the Bill of Rights at this point in time?
49.It is the Petitioners’ contention that if the application is not allowed, they will be unlawfully compelled to comply with the requirements of the Excise Duty Act and their businesses will be forced to close down. To that end, they contended that they will lose their investments and be forced to lay off their staff.
50.Whereas this Court clearly understands the precarious position the Petitioners are in, it cannot negate the fact that some of those in the Petitioners’ business have already complied with the law. This Court takes note of the fact that the allegation by the Petitioners that those who were found to be in contravention of the Excise Duty Act, admitted to the relevant offences and paid fines and penalties, did so against their will, cannot stand since those who were involved did not depose to such allegations. There is, therefore, preliminary evidence of compliance with the law on the part of some of the Petitioners.
51.Given the foregoing state of affairs and for this Court to conclusively deal with the matter, the Court will have to interrogate the issues on the constitutionality and legality of the impugned notice and whether the Petitioners fall within the description of manufacturers under the law. Such issues cannot be subject of an interlocutory application, but of the main hearing of the Petition. (See the Court of Appeal in Civil Application Nai. 31 of 2016 Alfred N. Mutua v Ethics & Anti-Corruption Commission (EACC) & 4 others [2016] eKLR).
52.Further, in the event the rest of the Petitioners comply with the prevailing law and the impugned notice and they make payments as demanded, there is no submission made that in the event the Petition succeeds the Respondents will not be able to be reimburse the payments made by the Petitioners.
53.On the other hand, the Respondents contended that the taxes in issue fall within the category of consumption taxes in that they are borne by the consumers such that if they are not collected, then there was no any other way to recover the same even when the Petition fails.
54.The Respondents have, therefore, demonstrated that the suspension of the part of the statute will occasion a lacuna in their operations which, if left unfilled, even for a short while, is likely to cause very grave consequences to the general populace. I say so because the country inter alia depends on taxes to fund its budget such that if the budget is not properly funded by the collection of taxes then it is the general populace which stands to suffer.
55.This Court is, therefore, not persuaded that the Petitioners have laid a basis to unseat the doctrine of presumption of constitutionality and legality of statutes in this matter. The Court is also not persuaded that unless the application is allowed, the Petitioners stand to suffer real prejudice.
56.As to whether the Petition will be rendered otiose in the absence of the orders sought, this Court takes the contrary position. The issues raised in the Petition go beyond the interlocutory application. In the main, the Petition seeks to declare several actions of the Respondents unconstitutional among other prayers.
57.It is, now, the finding of this Court that the Petition survives even in the absence of the orders sought in the application.
58.On the basis of the foregoing, the issue at hand is answered in the negative.
iii. Public interest:
59.‘Public interest’ is defined by the Black’s Law Dictionary 10th Edition at page 1425 as: -The general welfare of a populace considered as warranting recognition and protection. Something in which the public as a whole has stake especially in something that justifies government regulation.
60.Broadly speaking, the Constitutionand the laws govern the people. As such, the Constitutionremains supreme and the laws are always presumed to be constitutional until the contrary is proved. In a matter, therefore, where the constitutionality of a statute is impugned or an issue arises as to whether the Constitutionis contravened, Courts must weigh, with care and at a preliminary stage, the alleged breach against the provisions of the Constitutionand the doctrine of presumption of constitutionality and legality of statutes.
61.It is in public interest that taxes are paid so as to enable the larger public be sustained in terms of service provision.
62.On the basis of the foregoing, and in the exceptional circumstances in this matter, this Court finds that public interest tilts in favour of the Respondents. It is in public interest that the impugned notice and the law be adhered to pending the outcome of the Petition.
Disposition:
63.The above analysis yields that the Petitioners have not, in the meantime, successfully laid a basis for the grant of the orders sought in the application.
64.That being the case, the application is unsuccessful. However, given the nature of the Petition herein, there is need for appropriate directions and for expeditious disposal of this matter.
65.In the end, the following orders hereby issue: -a.The Notice of Motion dated April 12, 2022is hereby dismissed.b.The Petition to be heard by way of reliance on the pleadings, affidavit evidence and written submissions.c.The Respondents shall within 14 days hereof file and serve responses to the Petition, if not yet.d.The Petitioners shall, thereafter, and within 14 days of service file any supplementary responses, if need be, together with written submissions on the Petition.e.The Respondents shall file and serve their respective written submissions within 14 days of service.f.Further directions to issue on a date suitable to the Court and the parties.Orders accordingly.
DELIVERED, DATED AND SIGNED AT NAIROBI THIS 14TH DAY OF JULY, 2022.A.C. MRIMAJUDGE
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