Bidco Oil Refineries Limited v The Attorney General & 3 others

sought to address the constitutionality as well as the interpretation and applicability of the East Africa Community Customs Management Act, 2004 - Constitution of Kenya, article 165(4). Constitutional law-discretion of a single judge to determine whether the petition raises substantial question of law-whether the petition could be referred to the Chief Justice for purposes of setting up a three (3) judge bench for hearing and determination-Constitution of Kenya, article 165(4). Brief facts The petitioner instituted a constitutional petition before the High Court challenging actions by the respondents, namely the Attorney General, the Kenya Revenue Authority (KRA), the Commissioner-General of KRA, and the Commissioner of Customs and Excise, in relation to the assessment and collection of customs duty under the East African Community Customs Management Act, 2004 (EACCMA). The dispute arose from tax assessments made by the KRA against the petitioner, which the petitioner contended were unlawful, unconstitutional, and amounted to an arbitrary deprivation of property. Prior to the constitutional petition, the petitioner had challenged the tax assessments through judicial review proceedings, where the High Court upheld the assessments. Notwithstanding that determination, the petitioner proceeded to file the instant constitutional petition raising, inter alia, issues concerning the constitutionality of the tax demand, the applicability and interpretation of the EACCMA, and whether a matter previously determined through judicial review could be re-litigated as a constitutional question. Subsequently, the 2nd, 3rd, and 4th respondents filed an application seeking certification of the petition as raising substantial constitutional and legal questions of great public importance. They urged the court to refer the matter to the Chief Justice for empanelment of a bench of not less than three judges to hear and determine the petition. The applicants argued that the matter had far-reaching implications on tax administration, public revenue, and the edible oils industry, and that it had generated uncertainty in the application of customs laws. The petitioner opposed the application, contending that the issues raised were neither novel nor complex so as to warrant certification as substantial questions of law. It maintained that public interest, the amount involved, or the existence of similar disputes did not meet the constitutional threshold for empanelment of a multijudge bench. The 1st respondent similarly opposed the application on the basis that the matter did not disclose substantial questions of law requiring determination by an expanded bench. The court was therefore called upon to determine whether the issues raised in the petition met the threshold of “substantial question of law” to justify referral to the Chief Justice under article 165(4) of the Constitution. Issues i. Whether the petition raised substantial constitutional and legal issues of great public interest as it dealt with the assessment and collection of customs duty within the provisions of the East Africa Community Customs Management Act, 2004. ii. Whether a single judge had discretion to determine whether a petition raised substantial issues of law to be referred to the Chief Justice for the constitution of a three (3) judge bench to hear and determine it. Relevant provisions of the Law Constitution of Kenya Article 165 - High Court (4) Any matter certified by the court as raising a substantial question of law under clause (3) (b)(d) shall be heard by an uneven number of judges, being nor less than three, assigned by the Chief Justice. Held 1. The Constitution of Kenya did not define substantial question of law. It was left to the individual judge to satisfy himself or herself that the matter was substantial to the extent that it warranted reference to the Chief Justice to appoint an uneven number of judges not being less than three to determine a matter https://new.kenyalaw.org/akn/ke/judgment/kehc/2013/4587/eng@2013-04-05 2

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2. A substantial question had to take into account the provisions of the Constitution and the need to dispense justice without delay particularly given a specific fact situation. Each case had to be considered on its own merits by the judge certifying the matter. 3. The issues raised by the applicants were weighty; however they did not raise any novel issues of law or matters of law that required the court to tread new ground to the extent that it would consider that the matter raised substantial questions of law. 4. The subject matter of the suit was a matter of public interest. Indeed, an Article in one of the leading newspapers was titled, “Taxman, Bidco in historic face-off.” Public interest, of itself was not necessarily a determinant in the exercise of discretion under article 165(4) of the Constitution of Kenya and if it were, the Constitutional and Human Rights Division of the High Court would have to be sitting in division of three as a rule. The large sum of money involved and the consequent effect of the exchequer was also not, of itself, a matter that would sway the High Court in exercising discretion in the applicant's favour. 5. Notwithstanding the fact that there were several matters filed by other persons with similar interest in the outcome of that case, that did not necessarily warrant the empanelling of a three judge bench. Those cases were not before the High Court and had not been consolidated with that matter. They had to be determined on their own merits. 6. Weighed against the yardstick of what constituted a substantial question of law, the issues could indeed be substantial and of great public interest. However, they did not merit hearing by an uneven number of judges and could be adequately dealt with by a single judge. Should any party not be satisfied with the decision of the single judge, the appeal process in which the matter fell for consideration before a bench of three appellate judges in the Court of Appeal and where there was the option of further appeal to the Supreme Court would be open to the party. Application dismissed; costs to be in the petition. Citations Statutes 1. Constitution of Kenya, 2010 Advocates Mr Ochieng’ Oduol instructed by Ochieng’ Onyango, Kibet and Ohaga Advocates for petitioner Mr W. Gatonye instructed Waweru Gatonye and Company Advocates for 2nd, 3rd and 4th respondents RULING 1. The application for consideration is a Chamber Summons dated 1st October 2012 in which the 2nd, 3rd and 4th respondents (“the applicants”) seeks an order that, ‘This Honourable Court do certify the petition dated 30th April 2012 (together with the response thereto) as raising substantial constitutional as well as legal issues of great public interest and that the same be referred to the Honourable Chief Justice for purposes of setting up a three (3) judge bench to hear and determine the petition.’ 2. Article 165(4) of the Constitution sets the standard for referring a matter to the Chief Justice to constitute a bench of uneven judges not being less than three to hear a matter. It provides, “ Any matter certified by the court as raising a substantial question of law under clause (3) (b)(d) shall be heard by an uneven number of judges, being nor less than three, assigned by the Chief Justice.” 3. In the case of Community Advocacy and Awareness Trust and Others v Attorney General Nairobi Petition No. 243 of 2011 (Unreported), I observed that, “[8]The Constitution of Kenya does not define, “substantial question of law.” It is left to the individual judge to satisfy himself or herself that https://new.kenyalaw.org/akn/ke/judgment/kehc/2013/4587/eng@2013-04-05 3

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the matter is substantial to the extent that it warrants reference to the Chief Justice to appoint an uneven number of judges not being less than three to determine a matter …… [10]… giving meaning to “substantial question” must take into account the provisions of the Constitution and need to dispense justice without delay particularly given a specific fact situation. In other words, each case must be considered on its merits by the judge certifying the matter.” 4. According to the applicants, the petitioner and the response filed thereto raised fundamental constitutional and legal issues which involve public interest and deserve a hearing by an uneven number of judges not being less than three. The issues enumerated are as follows; i. Whether taxes already assessed by the tax assessment and collection Agency (Kenya Revenue Authority) and upheld by the High Court in a judicial review challenge can subsequently be challenged in a constitutional petition in the High Court. ii. The Constitutionality as well as the interpretation and applicability of the East Africa Community Customs Management Act, 2004 (EACCMA), a key legislation that guides management of customs in the East African region. iii. Whether a demand to pay lawfully assessed taxes amounts to arbitrary taking and deprivation of private property. iv. Whether a dispute already determined in a judicial review challenge can be subject of a constitutional petition notwithstanding the appeal process, a process that needs sound pronouncement of the court to guide future litigants. 5. Apart from the argument that the issues in the matter constitute substantial issues of law, the applicants contend that the pendency of the petition has now created a wind of uncertainty in the assessment and collection of customs duty within the provisions of the EACCMA and the issues need a just and proportionate determination. The applicants further contend that the filing and pendency of this petition is of great concern to the edible oil industry and since the filing of this petition similar litigation has been filed in the High Court and also at the Customs Appeals Tribunal. 6. The respondents oppose the application on the basis that the applicants have not met the threshold for the case to be referred to Article 165(4). The petitioner opposes the application on three broad grounds.In summary it contends that the issues raised in the petition and the response are not complex to the extent that they can be said to raise a “substantial question of law.” Secondly, the petitioner submits that mere public interest in the outcome of the case is insufficient to bring the case within the scope of Article 165(4). Thirdly, the petitioner dismisses the contention that the fact that the matter is important for stakeholders in the edible oils industry is a ground for reference under Article 165(4). 7. The 1st respondent also denies that the subject of this suit is a matter for reference to the Chief Justice. It submitted that although the suit raises weighty issues that may be of public interest such issues are not substantial to require the constitution of a bench under Article 165(4). 8. I have considered the written submissions filed by the parties in light of the pleadings and depositions on either side. The parties have already filed written submissions in support of and in opposition to the petition which I have had occasion to read. I have already dealt with the interlocutory application for conservatory orders. In my view although the issues raised by the applicants are weighty, I do not think that they raise any novel issues of law or matters of law that require the court to tread new ground to the extent that I would consider that this matter raises substantial questions of law. 9. The applicants have annexed to the supporting affidavit of Charles Waweru Gatonye sworn on 1st October 2012 an article in one of the leading newspapers titled, “Taxman, Bidco in historic face-off.” I https://new.kenyalaw.org/akn/ke/judgment/kehc/2013/4587/eng@2013-04-05 4

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agree that the subject of this suit is a matter of public interest. Public interest, of itself is not necessarily a determinant in the exercise of discretion under Article 165(4). And if it were, the Constitutional and Human Rights Division of the High Court would have to be sitting in division of three as a rule. I am in agreement with the petitioner that the large sum of money involved and the consequent effect of the exchequer is also not, of itself, a matter that would sway my mind in exercising discretion in the applicants’ favour. 10. Lastly, the fact that there are several matters filed by other persons with similar interest in the outcome of this case does not necessarily warrant the empanelling of a three judge bench. Those cases are not before this court and have not been consolidated with this matter. They will be determined on their own merits. 11. In conclusion, I adopt the statement of Justice M. Ngugi in Gilbert Mwangi Njuguna v Attorney General Nairobi Petition No. 267 of 2009 [2012]eKLR, “Weighed against the yardstick of what constitutes a ‘substantial question of law’ the issues may indeed be substantial and of great public interest. However, in my view, they do not merit hearing by an uneven number of judges and can be adequately dealt with by a single judge. Should any party not be satisfied with the decision of the single judge, the appeal process in which the matter fall for consideration before a bench of 3 appellate judges in the Court of Appeal and where there is the option of further appeal to the Supreme Court will be open to the party.” 12. I therefore dismiss the 2nd, 3rd and 4th respondents Chamber Summons dated 1st October 2012. The costs shall be in the petition. DATED AND DELIVERED AT NAIROBI THIS 5TH DAY OF APRIL 2013. D.S. MAJANJA JUDGE Mr Ochieng’ Oduol instructed by Ochieng’ Onyango, Kibet and Ohaga Advocates for the petitioner. Mr W. Gatonye instructed Waweru Gatonye and Company Advocates for the 2nd, 3rd and 4th respondents. https://new.kenyalaw.org/akn/ke/judgment/kehc/2013/4587/eng@2013-04-05 5

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