[2023] KETAT 355 (KLR)

Baylem Limited v Commissioner of Domestic Taxes (Appeal 921 of 2022) [2023] KETAT 355 (KLR) (9 June 2023) (Ruling)

Neutral citation: [2023] KETAT 355 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Appeal 921 of 2022

E.N Wafula, Chair

June 9, 2023

Between

Baylem Limited

Appellant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

1. The application which was by way of a Notice of Motion dated and filed on February 6, 2023is supported by an Affidavit sworn by the Respondent’s Advocate, Victor Andambi Chabala, on the even date seeks for the following Orders:-a.The Honourable Tribunal do grant the Respondent leave to file and serve a further Statement of Facts;b.The Further Statement of Facts dated and filed onFebruary 6, 2023be deemed as duly filed;c.The costs of this application be in the cause of the Appeal.

2. The application is premised on the following grounds:-a.That when working on the Statement of Facts the previously appointed Advocate for the Respondent, Mr. Rogers Koima, inadvertently omitted some crucial facts as per the instructions given by the client.b.That the previous Advocate is currently away on study leave and forgot to give a handing-over report for this file at the time of his departure.c.That it is only at the time when we were served with submissions and were seeking to respond to them that by reviewing the pleadings that we were able to notice this oversight.d.That this mistake should not be visited upon the Respondent to the detriment of its right to justice.e.That in order for this Honourable Tribunal to properly and effectively adjudicate on the contested matter herein, it is imperative that the Respondent be allowed leave to serve and file the Further Statement of Facts.f.That the Further Statement of Facts only seeks to bring out the factual explanation contained in the documents within the knowledge of the parties and exchanged prior to issuance of the Objection decision.g.That the Appellant will not be prejudiced by the leave sought to file and serve the Further Statement of Facts as the Appellant can be granted leave to respond to the pleadings.h.That the Respondent’s interest stands to suffer great prejudice if this application is not granted.i.That it is just and equitable to grant reliefs sought.

3. The Respondent in its written submissions dated February 23, 2023and filed before the Tribunal on February 24, 2023 stated as hereinafter.

4. The applicant relied on the case ofPaul Waratho &another v Bata Shoe Co. Ltd & 2others [2016] eKLR where the court stated that: “In that decision the Court of Appeal cited the case of Belinda Murai &others vs. Amoi Wainaina where Madan JA said as follows;“A mistake is a mistake. It is no less a mistake because it is unfortunate slip. It is no less pardonable because it is committed by senior counsel though in the case of junior counsel the court might feel compassionate more readily. A blunder on a point of law can be a mistake. The door of justice is not closed because a mistake has been made by a lawyer of experience who ought to know better. The court may not condone it but it ought certainly to do whatever is necessary to rectify it if the interest of justice so dictates. It is known that courts of justice themselves make mistakes which is politely referred to as erring in their interpretation of laws and adoption of a legal point of view which courts of appeal sometimes overrule.”

5. The respondent submitted that the Further Statement of Facts the respondent wishes to file seeks to expound by way of explanations, the documents already produced in the initial Statement of Facts filed on September 29, 2022.

6. It further submitted that the further Statement of Facts is crucial to this case and will go a long way in assisting the Honourable Tribunal in making a determination of the issues in the Appeal currently pending before it and allowing the current application will not prejudice the Appellant.

7. It urged the Tribunal to be guided by the caseof Commissioner of Income Tax v Total Kenya Limited(2021) eKLR where it held that:-“In Tarmohamed & another v Lakhani & Company [1958] EA 567, the Court of Appeal for Eastern Africa adopted the decision in Ladd v Marshall[1954] WLR 1489 and stated: -Except in cases where the application for additional evidence is based on fraud or surprise: to justify reception of fresh evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.In Wanjie & others v Sakwa & others [1984] KLR 275, in considering the need for restricting reception of additional evidence under Rule 29 of the Court of Appeal Rules, Chesoni JA observed at pg 280 thus: - This rule is not intended to enable a party who has discovered fresh evidence to import it nor is it intended for a litigant who has been unsuccessful at the trial to patch up the weak points in his case and fill up omissions in the Court of Appeal. The Rule does not authorise the admission of additional evidence for the purpose of removing lacunae and filing in gaps in evidence. The appellate court must find it needful. Additional evidence should not be admitted to enable a plaintiff to make out a fresh casein appeal. There would be no end to litigation if the rule were used for the purpose of allowing the parties to make out a fresh case or to improve their case by calling further evidence. It follows that the power given should be exercised very sparingly and great caution should be exercised in admitting fresh evidence.From the foregoing, it is clear that the power to admit additional evidence is discretionally. However, it should be exercised restrictively. The evidence sought to be adduced must not have been in the possession of the applicant or could have been obtained with due diligence. That the evidence should be needful and not meant to patch up an applicant’s case on appeal. Finally, the power should be exercised sparingly but for the ends of justice.In the present case, the evidence was in the possession of the applicant during the trial before the tribunal. However, it was contended, and not controverted, that it was not produced at the trial because the parties knew or conducted themselves in a manner suggesting that it was not necessary. This is so because, the parties with knowledge that the mutual agreement process had collapsed, resorted to the appeal before the Tribunal before and without considering the Alternative Dispute Resolution required under article 24 of the Double Taxation Agreement. This is the article the Tribunal relied on to determine the matter against the applicant.The court has considered that the evidence sought to be relied on is needful. This is so because there was no contention that the respondent had raised the issue of jurisdiction before the Tribunal. It was submitted that that was the case because the parties knew of the position of the MAP that there was no requirement for ADR before approaching the Tribunal.The Court is persuaded that, if it be true that the Tribunal's decision was based on the unavailability of the intended evidence and reliance thereon was suo motto, that piece of evidence would have been crucial to the applicant's case. There would be no prejudice to be suffered if the said evidence is adduced at this stage.”

8. The Respondent contended that what it is seeking is production of evidence by way of explanation of documentation already filed save for a few documents and no prejudice is to be suffered if the said evidence is adduced at this stage.

9. It cited section 78(1) of the Civil Procedure Act and relied on the Supreme Court decision in Mohamed Abdi Mahmud v Ahmed Abdullahi Mohamed & 3others (2018) eKLR where it was held that:-“We therefore lay down the governing principles on allowing additional evidence in appellate courts in Kenya as follows: (a) the additional evidence must be directly relevant to the matter before the court and be in the interest of justice;(b)it must be such that, if given, it would influence or impact upon the result of the verdict, although it need not be decisive;(c)it is shown that it could not have been obtained with reasonable diligence for use at the trial, was not within the knowledge of, or could not have been produced at the time of the suit or petition by the party seeking to adduce the additional evidence;(d)Where the additional evidence sought to be adduced removes any vagueness or doubt over the case and has a direct bearing on the main issue in the suit;(e)the evidence must be credible in the sense that it is capable of belief;(f)the additional evidence must not be so voluminous making it difficult or impossible for the other party to respond effectively;(g)whether a party would reasonably have been aware of and procured the further evidence in the course of trial is an essential consideration to ensure fairness and due process;(h)where the additional evidence discloses a strong prima facie case of willful deception of the court;(i)The Court must be satisfied that the additional evidence is not utilized for the purpose of removing lacunae and filling gaps in evidence. The Court must find the further evidence needful.(j)A party who has been unsuccessful at the trial must not seek to adduce additional evidence to, make a fresh case in appeal, fill up omissions or patch up the weak points in his/her case.(k)The court will consider the proportionality and prejudice of allowing the additional evidence. This requires the court to assess the balance between the significance of the additional evidence, on the one hand, and the need for the swift conduct of litigation together with any prejudice that might arise from the additional evidence on the other.”

10. The respondent asserted that additional evidence by way of an expounded further Statement of Facts and other documentation attached are directly relevant to the Appeal before the Tribunal and would influence the impact of the current Appeal and it is not seeking a fresh case but a proper determination of the Appeal at hand.

11. The respondent cited the case of The Administrator of His Highness Aga Khan Platinum Jubilee Hospital v Munyambu CA No 18 of 1983 where the Court of Appeal held that:- “ if it will probably have an important influence on the result of the appeal, and is apparently credible, ”

12. The respondent further cited the case of IEBC v Robert K. Nyengi [2015] eKLR where the Supreme Court held that:- “ it is essential for a court in exercising its discretion to admit additional evidence to ensure no prejudice is occasioned to a party if the evidence is admitted.”

13. The respondent reiterated that the additional evidence is intended to remove any vagueness or doubt over the matter on appeal and has a direct bearing on the main issue in the instant appeal.

Response to the Application 14. The appellant filed Grounds of Opposition dated February 8, 2021 on February 9, 2023 in response to the current Application citing the following as its grounds in opposition to the application.a.That the said application is fatally defective and therefore null and void because it relates to an alleged dispute between the Appellant and a third party, which dispute has not been appealed against before this Honourable Tribunal and which this Tribunal has no jurisdiction to entertain.b.That the said application seeks leave to file a purported Statement of Facts relating to a purported dispute between the appellant and a third party, and which therefore does not relate to the appeal that is pending before this Honourable Tribunal.c.That the respondent’s further Statement of Facts annexed to the Application introduces as a party to these proceedings an entity that has not been formally enjoined to these proceedings.d.That the respondent’s Further Statement of Facts and documents annexed to the Application are defective as they are drawn and filed by an advocate who is not properly on record as having taken over from the Commissioner of Investigations & Enforcement and not the Commissioner of Domestic Taxes.e.That the Further Statement of Facts which is sought to be introduced herein annexes documents that are both irrelevant and inadmissible in evidence and which cannot therefore be introduced.f.That the documents annexed to the Further Statement of Facts involving a correspondence with Gray Oak are further irrelevant as the said entity is not a party to this matter.g.That no justifiable or other grounds have been advanced to warrant the grant of the orders sought in the said application.h.That the said application, the further Statement of Facts, and the documents sought to be introduced seek to completely change the nature and character of the Applicant’s appeal that the appellant actually filed herein for determination to an appeal that the Respondent would like the appellant to present to this Tribunal for determination.i.That a respondent cannot be permitted to dictate to the appellant the issues and arguments that it should raise and the form of an appeal that it should present against the Respondent.j.That some of the documents included in the bundle of documents annexed to the Further Statement of Facts relate to the communications exchanges between third parties hereto.k.That the application is extremely prejudicial to the Appellant who has already filed its final submissions and served the same on the Respondent who now seeks to amend its case at the tail end.

15. The respondent prayed for the Tribunal to dismiss the Application with costs to the applicant.

Appellant’s Submissions 16. Seeing as the Appellant did not file its submission, the Tribunal relies on its Grounds of Opposition to make out its case.

Analysis and Findings 17. The Respondent submitted that the previous appointed Advocate for the Respondent went away on study leave and forgot to give a handing-over report for this file at the time of his departure, in which he inadvertently omitted some crucial facts as per the instructions given by the client while preparing the Statements of Facts, which mistake was found out after it was served with submissions. It added that such a mistake should not be visited upon the applicant to the detriment of its right to access to justice.

18. The Appellant argued that the application is fatally defective because it relates to an alleged dispute between the Appellant and a third party, which dispute has not been appealed against before this Honourable Tribunal and this Tribunal has no jurisdiction to entertain. It averred that the Respondent’s further Statement of Facts is defective as it is drawn and filed by an Advocate who is not properly on record as having taken over from the Commissioner of Investigations & Enforcement and not the Commissioner of Domestic Taxes.

19. It added that no justifiable or other grounds have been advanced to warrant the grant of the orders sought in the said application and the application, the further Statement of Facts, and the documents seek to change the nature and character of the appeal that the appellant filed for determination to an appeal that the respondent would like the appellant to present to this Tribunal for determination and the respondent cannot dictate to the Appellant the issues and arguments that it should raise and the form of an appeal that it should present against the Respondent.

20. The Appellant reiterated that the application is prejudicial to the Appellant who has already filed its final submissions and served the same on the Respondent who now seeks to amend its case at the tail end.

21. Section 17 of the Tax Appeals Tribunal Act provides as follows with regard to production of documents:-“The Tribunal may call any person to attend at a hearing and give evidence including production of any document if the Tribunal believes such evidence shall assist in its deliberations.”

22. As set out above, the Tribunal has the jurisdiction and authority to order for or allow any evidence it deems necessary for the just resolution of the dispute before it.

23. It seems curious that the respondent seeks to file a Further Statement of Facts after the Appellant has filed its submissions thereby seeking to relitigate the issue. It is not for the Appellant to suffer the consequences of the Respondent’s disorganization and/or internal failures.

24. It is, however, the Tribunal’s mandate to determine the case based on its merits and get to the crux of the issue at hand.

25. In the case of TAT Appeal 572 of 2021 Incentro Africa Ltd v. Commissioner of Domestic Taxesthis Tribunal stated that:-“Parties before the Tribunal ought to be permitted opportunities to present and ventilate their appeals in a manner that affords a fair and just determination of the dispute, including allowing parties to file such documents that the parties may consider necessary in ensuring just and efficient and effective determination of the matter by the Tribunal.”

26. The Tribunal therefore finds that the Appellant shall not be prejudiced as it will be afforded an opportunity to traverse and make adequate response to the arguments fronted.

Disposition 27. The Tribunal in the circumstance is inclined to agree with the Respondent and accordingly makes the following Orders:-a.The application for leave to file additional documents be and is hereby allowed.b.The Respondent’s Further Statement of Facts be and is hereby deemed as duly filed and served.c.The Appellant be and is hereby granted corresponding leave to file and serve any of its Supplementary Statement of Facts and/or additional document to be filed and served within Fifteen (15) days of the date of delivery of this Ruling.d.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF JUNE, 2023. ...........……………….ERIC N. WAFULACHAIRMAN…..………………………. …….……...….…………CYNTHIA B. MAYAKA RODNEY ODHIAMBOMEMBER MEMBER……………………………………..………………..ELISHAH NJERU ABRAHAM K. KIPROTICHMEMBER MEMBER