[2016] KECMT 20 (KLR)

Gesicho v Capital Markets Authority & another (Appeal 4 of 2007) [2016] KECMT 20 (KLR) (7 June 2016) (Ruling)

Neutral citation: [2016] KECMT 20 (KLR)

Republic of Kenya

In the Capital Markets Tribunal

Appeal 4 of 2007

JK Kibet, Chair, L Macharia, K. Kandie, K. Nyamweya & K. Kinyua, Members

June 7, 2016

Between

David O. Gesicho

Appellant

and

The Capital Markets Authority

1st Respondent

CFC Financial Services Ltd

2nd Respondent

Ruling

1The Application for determination is the notice of Motion dated April 13, 2015 brought under Chapter 6 of the constitution of Kenya, Section 35A of cap 485A, order 51, rule 1of the Civil Procedure Rules 2010 and all enabling provisions of the Law.

2The Applicant prays for the following Orders:1. That the Chairman of the Capital Markets Tribunal (‘‘CMT’’or the‘‘Tribunal’’) Mr Jinaro Kipkemoi Kibet recuse/disqualify himself from hearing Appeal No.4 of 2007. 2.That Dr. Laila Macharia a member of the tribunal recuse/ Disqualify herself from hearing Appeal No.4 of 2007. 3.That Karen NJeri Kandie, a member of the Tribunal recuse/disqualify herself from hearing Appeal No.4 of 20074. That each party bears their own cost.

3The application is premised on the following grounds-:a.That Mr.Jinaro Kipkemoi Kibet the Chairman of Capital Markets Tribunal’s impartiality is questionable because of conflicts of interest his business links with the executive arm of Gorvernment which is the appointing authority of the Chair to the tribunal and the fact that several companies listed on the Nairobi Securities Exchange are the clients of a law firm known as TripleoKlaw Advocates , where the Chairman is a senior Partner.b.That in consideration of chapter six on leadership and integrity of th Constitution of Kenya , Mr Jinaro Kipkemoi Kibet is not fit to hold any public office.c.That Mr. Jinaro Kipkemoi Kibet has certain unanswered questions regarding his integrity, On of them being that he served under the immediate former Chairman of the Capital Markets Tribunal,Mr. Morris Guchura Njage,who was and is still involved in court cases With National Bank of Kenya in which he is alleged to have defaulted in payment of several loans. And Mr. Jinaro Kipkemoi Kibet’s Law firm Tripleoklaw Advocates has always represented National Bank of Kenya as one of its clients.d.That Dr. Laila Macharia serves as a director in Barclays Bank of Kenya and acts also as the Chair of subsidiary company of Centum Invstements Company Limited which is the largest listed investement company on the Nairobi Securities Exchange .This place her in a position of conflicts of interest and hence she should not be serving in the Tribunal in the first instance.e.That Karen Njeri Kandie was the Head of Finance and Administration at the Nairobi Stock Exchange from August 2005 to November 2009 during the very turbulent times of the Nairobi Stock Exchange as aptly described in the various audit reports commissioned by the Capital Markets Authority and the Nairobi Stock Exechange, and that, according to the Applicant , Ms Karen Njeri Kandie should be answering several queries and giving evidence at Capital Markets Tribunal rather sitting as a member of the Tribunal.

4The Applicant urged the tribunal to rely fully on his submisions made on the April 4, 2015 and his Supporting affidavit dated April 15, 2015. The gist of is his supporting affidavit is that the Chairman of the Capital Markets Authority Tribunal Mr. Jinaro Kibet is a senior Partner in the Law firm of TRIPLEOK Advocates that was founded in 2002 as a results of the merger of three firms; Ochieng’ Oduol & Company, Onyango, Ohaga & Company and Kibet & Company.That the said law firm of Tripleoklaw Advocates do provide advice and legal solutions to several chip companies, state corporations and Numerous local companies plus Stanbic Bank (Formerly CFC). He further avers that the executive arm of the Government does provide business to TRIPLEOK Advocates. He continues to state that the appointing Authority of the Capital Markets Tribunal is an interested party in the outcome of all matter before the Tribunal and continues to appoint officer to the Tribunal. This therefore brings about a conflicts of interest with the members of the executive arm of the Gorvernment who are also engaged in business or have substantive shareholding in the busines yet they are supposed to be supervising and regulating it.

5The Applicant continues to state that the appointing of the Authority of the Capital Markets Tribunal has ignored to appoint or initiate a process of vetting of the officers of the Tribunal, even after being petitioned by the Apellant/Applicant herein. The Applicant further states that the appointing authority has in the past condoned and allowed a member to serve as Chairman of the Capital Markets Tribunal who has been involved and compromised in a financial scam and may have been involved in forging a court order contrary to the provisions of chapter Six of the constitution.

6He further alleges that the former Chairman of CMA Mr. Morris Guchura Njage is a loan defaulter to the National Bank of Kenya necessitating the filling of several cases in court and that the appointing authority being aware of all this went ahead to appoint Mr Morris Guchura Njage as the Chairman of CMT effective from November 23, 2007 to 2010, whereby the current CMT chairman served as a member of that Tribunal under Mr Morris Njage. Its is on this basis that the current Chairman of the CMT being aware that TripleOklaw Advocates advise/reperesent the National Bank of Kenya was entitled to serve in line with Chapter Six and Articles 10 and 232 of the constitution of Kenya.

7The Applicant further alleges that the appointing athority of CMT deliberately manipulated the course of Justice by delaying the appointment and resettlement of officers to the Tribunal contrary to Article 159(2) b and 160(1) of the Constitution of Kenya. At the of filing the application, one of the members of the CMT had not been appointed and gazetted, that means a span of 37 months of CMT id not function which he felt was deliberatley sabotaging the retrospective gazettement of officers of CMT.

8It is in line with ethical conduct,that the CMT Chairman should not have allowed himself to be

9Part of the pocess of manipulating the justice and therefore should not have taken up the offer of extension of his tenure for a second term as a Chairman of CMT having presided over non-functioning CMT.

10The Applicant state that the Chairman being a senior partner in the said Law firm of Tripleoklaw Advocates shold have declined the appointments as he is a man of means. He further stated that The Chairman should not serve as Chair as he doesn’t represent the ‘‘face of Kenya’’ in line with Article 10 and 232 of the constitution of Kenya in terms of religion, regional, culture and ethinic representation.

11The Chairman of CMT being aware of all the above should therefore remove himself from Presiding over not only CMT appeal No.4 of 2007 but all other appeals at the CMT in line with Articles 110, 159, 160 and 232 and Chapter 6 of the constitution of Kenya and CAP 485A section 35 of the laws of Kenya.

12The Applicant alleges that Dr. Laila Macharia is the founder of Scion Real now Africa Metro in Nairobi, which is an adivisory and investment firm focused on urban development inmAfrica. Scion Real continues to work with the Capital Markets Authority to stimulate housing Supply particulary by increasing finance for home buyers and builders. He therefore alleges that Dr. Laila’s interaction with CMA should automatically preclude her from being a member of the CMT.

13The Applicant continues to state that Doctor Laila Macharia was elected the vice Chairperson of (KEPSA) as from April 18, 2013. As a result, she ought not to have been a member of CMA since it is contrary to the provisions of CAP 485ASection 35A(3) b of the laws of Kenya. He continue to state that DR. Laila Machaira is Director at Centum Investment Company which is the largests listed company at NSE therefore this precludes her from being a member of CMA as it contravenes Section 35A (15) of the Laws of Kenya.

14The Applicant Further avers that Dr. Laila Macharia is a Director at Barclays of Kenya which Places her in the banking fraternity thus she cannot ordinarily be expected to adjudicate fairly in a dispute involving any Bank. Lastly, that she is also a woman of means. Therefore she does not need any extra income from the CMT.

15With all those allegations, therefore Dr. Laila Macharia should remove herself from presiding over not only the CMT appeals No. of 2007 but all appeals at the CMT in line with articles 10, 159,160, and 232 and chapter six of the Constitution of Kenya and CAP 485A Section 35A of the Laws of Kenya.

16The Applicant alleges that Karen Njeri Kandie has had recent interactions with CMA in her Previous position as a Financial and Risk consultant at First Trident Capital, besides being the Director of Victory Homes limited and an investor at Eden Beach. He further states that Karen Kandie, having previously worked at shelter Afrique, had the opportunity to lialse with strategic financial partners such s ADB, Commercial Bank of Africa , various other Banks and the CMA.

17Also, as Head of finance and Adminstration at the Nairobi Stock Exchange between August 2005 and November 2009, Ms. Kandie had opportunity to laise with key strategic partners such as the Capital Markets Authority. It was this period that the NSE had turbulent times. This precludes her from sittings as a member of the Tribunal. He further stated that Karen Njeri Kandie is a woman of means and therefore does not need an extra income.

18Being Aware of all this , Ms. Kandie should recuse herself from presiding over not only CMT Appeal No.4 of 2007, but all other appeals at the CMT in line with Articles 10, 159, 160 , 232 and CAP 485A, Section 35A of the Laws of Kenya.

19The Applicant summarizes that Chairman and those two members should morally and legally vacate their positions an their own volition.

20In reply to Applicant’s submisions, the council for the 1st respondent opposes the application for disqaulification. She stated that those were mere allegations against the Chairman and those two members which cannot make them disqaulify themselves. She termed those allegations as baseless and figments of allegations

21The counsel state that the Applicant has not shown how by virtue of Mr. Jinaro Kipkemoi Kibet being a member of the Tribunal presided over by Mr. Morris Guchura Njage could bring conflict of interest in this appeal No.4 of 2007.

22She further states that Dr Laila Macharia being a mere Vice Chairperson of KEPSA is not a good ground for her disqualification. She further states that those allegations have not been supported by any documentary evidence and that being a person of means is not a ground for disqualification recusal.

23The Counsel submitted that there was no breach of Chapter 6 of the Constitutution and that if this application is allowed,then this appeal will not be heard for lack of quorum thus the doctrine of necessity.

24The Counsel for the 2nd respondent submitted by aligning himself with the sentiments of the 1st respondent’s Counsel. He stated that this is an old appeal which needs to be disposed of. He stated further that the application is trivial and urged the Tribunal to look at the interests of all parties.

Analysis And Determination 25The tribunal has read the application , the supporting affidavit and the submision made by the Applicant who appeared in person and submissions made by counsels for the 1st and 2nd Respondent.

26The Tribunal finds the following as the issues fot determinations:a.Whether the Tribunal can determine issues of appointment/eligibilty of its members;b.Whether there is a likehood of bias /conflict of interest; andc.Whether the Chairman and the other two mwmbers of the Tribunal should recuse themseleves.

a. Whether the Tribunal can determine issues of appointments/eligibility of its members; 27The Tribunal finds it necessary to point out from the outset that the purpose of hearing of the present application is not to re-evaluate the eligibility or otherwise suitabilty of the Chairman,Mr. Kibet or the two members i.e Dr. Laila macharia and Ms. Karen Njeri Kandie. This is a matter within the jurisdiction of the appointing Authority.

28In High Court Petititon No. 373 od 2012 as consolidated with petition No. 426 of 2012;John Waweru Wanjohi & 27 others v. Attorney General & 6 others [2012] eKLR,to which the Tribunal has had reference to and where an application was instituted to challenge the appointment of the Chairperson and members to the National land Commision. The Honorable Majanja J. stated as follows:

‘‘the court must ofcourse be careful not to usurp the powers and functions of the various constitutional and statutory bodies involved in appontments. The role of then court is to ensure that the fidelity of the constitution is maintained’’

29Section 35 A of CAP 485 A Capital Markets Acts establishes the Capital Markets Tribunal whose members are appointed by the Minister. The Tribunal does not have the jurisdiction to determine its membership as it is not the appointing authority.

30In view of that, the Tribunal finds that this not the right forum to undertake an assesment of the integrity of or otherwise any member who the appointing Authority has appointed to serve.

b. Whether there is liklihood or bias/conflict of interest; 31It is trite law that the test to be applied in determining whether a real danger of bias or conflicts of interest would arise is an objective one. The Tribunal found it necessary to consider whether there is a reasonable ground for assuming the possibility of bias, if that is the Applicant,s fear. We have had reference to a number of decided cases on the subject of bias:In the case of Philip Tunoi & Another v. judicial Services Commmision &Another [2016 ] eklr the Justices of the Court of Appeal held that;‘‘ that in determining the existence or otherwise of bias, the test to be applied is that of a fair minded and informed observer who will adopt a balanced approach and will neither be complacent nor be unduly sensitive or suspicious in determing whether or not there is real possibility of bias. It held that it was not shown that circumstances exist that are likely to show that a real possibilty exist that the presiding judge’s integrity or impartiality migt reasonably be questioned.’’

32We find that the Apellant has not expalined any circumstances which point to the real likelihood of bias.The blanket allegations that Mr. Jinaro Kipkemoi kibet is linked with the executive arm of Gorvernment, without any substantiation or whatsoever, is not sufficient to prove that there is real danger of bias in deciding matters before the Tribunal. The further fact that Mr Jinaro Kipkemoi Kibet is senior Partner at the Law frim of Tripleoklaw Advocates does not establish bias or conflicts of interest in any way against the Appellant. There is a clear distinction between th role of Mr. Jinaro as the Chair of the Capital Markets Tribunal and his role as the Senior Partner in the firm of Tripleoklaw Advocates; his duties and personal dealings at the law firm do not conflict in any manner with the proceeding before the Tribunal.

33Neither Mr. Jinaro Kipkemoi Kibet nor the firm of Tripleoklaw Advocates has any pecuniary or proprietary interest in the matters before the Capital Markets Tribunal. The firm of Tripleoklaw Advocates does not have conduct of pecuniary interest in any matters before the Capital Markets Authority.

34We find no reason to presume bias or conflicts of interest from the fact that Mr.Jinaro Kipkemoi Kibet served under the immediate former Chairman of the Capital Markets Tribunal Mr. Morris Guchuru Njage who was or still involved in a court case with the National Bank of Kenya in which he defaulted in his payments towards several loans. The matter filed by the Applicant does not involve National Bank of Kenya. In any event, the personal dealing of Mr. Njagi whether financial or otherwise have no bearing or relationships whatsoever with persons who were sitting with him in the Tribunal.

35From the authorities citied herein, perception of fairness bias or prejudice to be suffered by a party if the member of the Tribunal continue hearing the matter have to be succinctly proven. There have to be well substantiated allegations and not unsubstantiated suspicion of personal bias or prejudice. We refer to the case of R V David Makali, Bedan Mbugua and Independent Media Services Ltd. Criminal Application Nos. 4 & 5 of 1995 (unreported) where it was stated that;‘‘Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not by aceeding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqalification of a judge they will have their case tried by soemone thought to be more likely to decide the case in their favour.’’

36The Tribunal also finds that the allegations of bias against the two members i.e Dr laila Macharia and Dr. Karen Kandie Njeri because of their professional association are a mere apprehension by the applicant that he will not get justice in this Tribunal. There is no suggestion whatsoever that the two members have any personal interest or pecuniary interest in the matter before the Tribunal.It has also not been shown that the entities they work with or have previously worked with have any interest or connection to the Applicant’s Appeal. The allegation of bias must be proven by facts.

c. Whether the Chairman and other two members of the Tribunal should recuse themselves;

37The issue of a recusal or judicial or quasi- judicial officer has been dealt with in many cases.In some cases, courts have granted the request and some of the request have been denied.

38The Tribunal is alive to the provision of Section 35A (14) of Cap 485A which states that:‘‘For the purpose of hearing and determining any cause or matter under this Act,Chairman and two memebers of the Tribunal shall form a quoram’’.

39The meaning of the above section is clear – the Tribunal’s proceeding will be bought to a halt if the chairman does not form part of the quorum. Unless the aforesaid sections are amended, the doctrine of necessity will always come into play to avoid a miscarriage of justice. This was so stated in the case of Jasbir Singh Rai & 3others v Tarlochan Singh Rai and 4 others [2013] eKLR where the Doctrine of necessity was applied in refusing an application for recusal of a judge. Ibrahim J while givng his ruling stated that‘‘out of necesssity the judge would have to sit to ensure that there will be no failiure of justice due to the bench being below the quorum set by the Constitution.

40The Tribunal finds that the decision in this case forms a precedent in these circumstances, if the Chairman and two other members of the Triibunal were to recuse themselves the Tribunal would not be duly constituted to hear and determine the matter as per the provisions od Section 35 (A) (14) of Cap 485 A.

41Having established that no conflicts of interest arises, we are satisfied that we have no inclination to any side and can therefore hear this matter obejectively for the following reasons;;i.We have no pecuniary or financial interest in the matter or any other matter before the Tribunal.ii.We have no proprietary interest in the outcome of the matter or any other matters before the Tribunaliii.The evidence of apparent bias in this case is no more than a mere apprehension on the part of the Appellant.iv.No distinction was made between the proffesional roles of the members and their roles as members of the Tribunal appointed under CAP 485A.v.There is no evidence or grounds for doubting our ability to ignore extrancous considerations prejudice and predilection and bring an objective judgement to bear on the issues before us.

Conclusion 42The following order therefore commend themseselves to the Tribunal;a.The application as contained in the notic of Motion dated April 13, 2015 is hereby dimissed for lack of merit with the cost to the Respondents.

DATED at NAIROBI this 7th day of June 2016. Signed:Jinaro K. Kibet_____________________ChairmanDr Laila Macharia_________________ MemberMrs. Karen Kandie_________________ MemberMr. Kennedy Nyamweya ____________ MemberMrs. Karumba Kinyua _______________Member9