Ethics and Anti-Corruption Commission successor of Kenya Anti-Corruption Commission v Midland Finance & Securities Limited & 2 others [2020] KECA 602 (KLR)
The bottom line
#Kenya's Court of Appeal ruled the Government was entitled to hire PwC to verify a disputed contract, dismissing contractors' constitutional claims as premature speculation.
What this practically means
#Executive summary
#Key legal issues
#Whether the PWC contract was illegal and an attempt by GOK to wriggle out of its contractual obligations
The contract was not illegal; GOK was entitled to verify whether goods and services were delivered and whether there were pricing, financing or other irregularities, and the supply contract's force majeure clause expressly subjected it to compliance with government rules and regulations.
The trial Judge had found the PWC contract was an attempt by GOK to escape its obligations under the 29th May 2003 supply contract. The Court of Appeal disagreed: it is normal practice for a customer to verify goods supplied before paying; GOK did not cancel the contract; and the supply contract contained a force majeure clause subjecting implementation to compliance with government regulations. Verification for value for money was a legitimate public duty of the Ministry responsible for payments and did not breach contractual or constitutional rights.
Whether the PWC contract usurped the anti-corruption investigative mandate of the appellant
There was no usurpation; the appellant's statutory mandate to work with others (Section 12(3) of ACECA) and the need for inter-agency collaboration meant GOK's engagement of PWC for forensic verification did not cede the appellant's authority.
The Court accepted that State agencies do not work in isolation and that Section 12(3) of the Act contemplated the appellant working with other bodies, including reputable audit firms like PWC. Until the PWC opinion was given and acted upon, it was premature to conclude, as the trial Judge did, that the appellant had ceded its authority to a private entity. The Court also invoked Mumo Matemu on inter-agency deference and checks and balances.
Whether the PWC contract encroached on the arbitration clause and the jurisdiction of the arbitral tribunal
The trial Judge's finding was factually incorrect and far-fetched; since no PWC report was ever issued, it was speculation that the report would substitute the role of a tribunal.
The Court held that seeking an opinion or gathering evidence to prepare its case is not something a party in a free society can be stopped from doing, and it would be for the tribunal to decide what evidence is admissible. Moreover, the orders issued by the High Court were final in nature and prejudiced GOK before any arbitration could occur, which was improper given that no concrete dispute had yet arisen.
Whether the respondents' claims of constitutional violations were premature and unripe
The claims were premature and not ripe for litigation; no investigations had been conducted and no charges preferred, so the alleged violations rested on mere apprehension.
Applying the ripeness doctrine as stated in Wanjiru Gikonyo and the reasoning in Julius Meme, the Court held that courts decide matters predicated on real threats based on tangible evidence. The respondents had not been charged with any offence; their complaint was about what might happen if the PWC contract were executed. The constitutional provisions relied on could not be construed to oust criminal jurisdiction, especially for acts occurring after the supply contracts.
Whether the Attorney General was estopped from reneging on his opinion
The Judge misconstrued the AG's role; the opinion was general, limited to GOK's legal capacity to contract, and the AG was not reneging on it by supporting a verification of compliance with government rules.
The Court distinguished Nedermar, where the AG had actually instituted criminal proceedings against contractors. Here no prosecution was instituted; the opinion did not exempt the parties from compliance with government rules and regulations, as the force majeure clause showed. If the respondents were aggrieved by the PWC report, that would be the moment a concrete dispute arose for adjudication under the supply contract.
Legal principles established
#- A party should not be allowed to seek an enlarged bench merely because it lost a case of a similar nature before another bench of the Court; an enlarged panel requires contradictory or inconsistent decisions of the Court
- An audit or verification commissioned by a Government Ministry to verify goods, services and value for money before making payment does not usurp the anti-corruption investigative mandate and is not per se illegal
- Courts will not entertain constitutional claims founded on mere apprehension; a threat to rights must be real, tangible and ripe for litigation
- The Nedermar principle that the Government is bound by the Attorney General's opinion remains good law, but its facts (actual prosecution) are distinguishable from mere apprehension of investigation
- A court may base its decision on an unpleaded issue if it appears from the course followed at trial that the issue was left to the court for decision
Court orders
#- 1.Appeal allowed
- 2.Orders granted in the impugned judgment dated 10th July, 2008 and all consequential orders set aside
- 3.Substituted order dismissing the petition with costs to the appellant
- On appeal from
- High Court of Kenya at Nairobi
- H.C. Petition No. 359 of 2007
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal Rules from the High Court constitutional petition (petition filed under Section 84 of the repealed Constitution)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ethics and Anti-Corruption Commission successor of Kenya Anti-Corruption Commission v Midland Finance & Securities Limited & 2 others [2020] KECA 602 (KLR)", Case Analysis (2020). Civil Appeal No 239 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/602/eng@2020-06-05
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.