Kenya Revenue Authority v Habimana Sued Hemed & another [2015] KECA 488 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed KRA must pay a transporter heavily for unlawfully seizing his trucks on mere suspicion without following the law.
What this practically means
#Executive summary
#Key legal issues
#Service of statutory notice and constitutionality of section 3(2)(a) KRA Act as amended by section 70 Finance Act 1998
The requisite notice had been served on the Attorney General; KRA is not an organ of Government and the notice provision was unconstitutional, so the proceedings before the High Court were regular and properly before the court
The plaint sued the Attorney General in his capacity as legal representative of Government, so service was inferred. The court endorsed High Court decisions holding that KRA, being a body corporate with capacity to sue and be sued, cannot hide behind the Attorney General's cloak to gain the 30-day notice. The provision prejudiced access to justice and was unconstitutional even before the 2010 Constitution.
Validity of the seizure notices
The seizures were not compliant with section 199(1) of Cap 472 because there were no reasonable grounds to believe the trucks conveyed uncustomed goods
Uncontroverted evidence, including KRA's own certified documents and the testimony of its officer Otieno Oyoo, showed the goods crossed Isebania into Tanzania with seals intact. The trucks found empty at Tigoni had no nexus with the goods seized at Eldoret. The seizure notices themselves admitted no reasonable grounds. Suspicion is a lighter threshold than reasonable belief and cannot justify seizure.
Service of the seizure notices on the owner
The seizure notices were not served on the 1st respondent as required by law; they were merely left at Tigoni Police Station
Section 200(1) and section 222(2) of Cap 472 prescribe service of the notice on the person seized within one month. No attempt was made to serve the owner, who obtained the notices only when he presented himself at the police station. The appellant also failed to respond to the notice of claim as required under section 202(2), so the trucks should have been released two months after the claim.
Role and culpability of the Attorney General
The seizure notices were issued by the appellant's officer Macharia, not the police; the 2nd respondent was not culpable and the joinder as third party was unprocedural; no apportionment of liability arises
The evidence established that the appellant's investigating officer issued the seizure notices. The Attorney General had been sued pursuant to section 3(2)(a) of Cap 472 as KRA's legal representative, so joining him as a third party seeking indemnity was improper, and there was no direct right of indemnity against him.
Award of damages
The pleaded US$60,000 per month and Kshs 5,000,000 general damages were upheld; the unpleaded US$24,000 per month was set aside; section 212(3) affords the appellant no protection since it acted without reasonable grounds
Special damages must be pleaded, but courts allow proof where the claim is manifest from the pleadings; the return-trip earnings were never pleaded. The contract agreement of June 1998 remained valid at the time of seizure. Section 212(3) applies only where there were reasonable grounds for the act, which were absent, and the appellant acted arbitrarily and with a sense of impunity.
Legal principles established
#- Kenya Revenue Authority is an autonomous corporate statutory body, not an organ of Government, and cannot rely on the 30-day statutory notice under the Government Proceedings Act to shield itself from suit
- Section 70 of the Finance Act 1998, importing the Government Proceedings Act notice regime into the KRA Act, was unconstitutional even before the Constitution of Kenya 2010
- Seizure of property under the Customs and Excise Act requires reasonable grounds to believe, not mere suspicion; seizure on mere suspicion is unlawful
- Where the Commissioner fails to comply with the statutory provisions on seizure notices and claims, the seized items must be released to the owner
- Section 212(3) of Cap 472 protects the authority only where there were reasonable grounds for the act of seizure; a regulator must exercise statutory discretion in good faith and within the limits of its authority
- Special damages not specifically pleaded cannot be awarded, though a lenient approach is taken where the existence of such a claim is manifest from the pleadings
- This Court's duty on a first appeal is to re-analyse and re-evaluate the entire evidence and arrive at its own independent decision
Court orders
#- 1.US$60,000 per month or its equivalent in Kenya shillings, exchange rate as at the date of the High Court judgment, calculated from 28th October 1998 to August 2002 when the trucks were released
- 2.The award of Kshs 5,000,000 left undisturbed
- 3.Order 1 to attract interest at 18% from the date of filing the suit until payment in full
- 4.Order 2 to attract interest at 18% with effect from the date of judgment of the High Court until payment in full
- 5.The appellant to pay the 1st respondent 70% of the costs of this appeal and before the High Court
- 6.The appeal against the 2nd respondent dismissed with costs to the 2nd respondent
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 364 of 2001
- Jurisdiction invoked
- First appellate jurisdiction under the Court of Appeal Rules (Rule 29(1) referred to); appeal from High Court
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Revenue Authority v Habimana Sued Hemed & another [2015] KECA 488 (KLR)", Case Analysis (). Civil Appeal No. 34 of 2008. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/488/eng@2015-07-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.