[2024] KETAT 1309 (KLR)

Lucro Limited v Commissioner of Legal Services and Board Coordination (Miscellaneous Application E601 of 2024) [2024] KETAT 1309 (KLR) (26 July 2024) (Ruling)

Neutral citation: [2024] KETAT 1309 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Application E601 of 2024

CA Muga, Chair, BK Terer, D.K Ngala, GA Kashindi & SS Ololchike, Members

July 26, 2024

Between

Lucro Limited

Applicant

and

Commissioner Of Legal Services And Board Coordination

Respondent

Ruling

1. The Applicant vide a Notice of Motion application dated the 5th day of June, 2024 and filed on even date sought for the following Orders:a.Spent.b.That the Tribunal be pleased to admit the Appeal filed herewith and deem the same as properly filed and proceed to consider the same.c.The costs of this Application be provided for.

2. The Application was supported by an Affidavit sworn by Dennis Kihara Chege, a director of the Applicant, on the 5th day of June, 2024 is premised on the following grounds:a.That the Applicant filed an Appeal on 1st April, 2021 via electronic mail.b.That the Applicant paid the filing fees and forwarded receipt to the Tribunal but the Tribunal never replied to the matter.c.That the Applicant has followed up the matter and has been advised to file afresh under the new (CTS e-filing system).d.That the issues raised in the said appeal have never been resolved and there is urgent need to resolve them through this Tribunal.e.That the Applicant humbly seeks the indulgence of the Tribunal to admit the Appeal filed herewith and to consider the same.f.That the Respondent will suffer no prejudice if this application is allowed.g.That accordingly, it is only fair, just and equitable that the said Application be heard under extreme urgency.h.That it is in the interest of justice that the prayers sought hereunder are granted.

3. When this matter came up for mention on 13th June 2024, the Respondent was directed to serve its response before close of business on 13th June 2024. However, the Respondent’s reply is not on record.

4. The matter came up again on 20th June 2024. Both parties were represented. The Tribunal directed the parties to file written submissions on or before 27th June 2024. However, the Tribunal notes that both parties’ submissions are not on record. Consequently, the Tribunal analyses the application with the available information.

Analysis And Findings 5. The Application seeks leave for the Tribunal to admit the appeal out of time. In determining whether to extend time, the High Court in Joseph Ondiek Tumbo v Sony Sugar Co Ltd [2014] eKLR, the learned Judge quoted Sir Thomas Bingham M R in Costellow V Somerset County Council (1993)1 All ER 952 where he stated as follows:“The first principle is that the rules of court and the associated rules of practice, devised in the public interest to promote expeditious dispatch of litigation, must be observed. The prescribed time limits are not targets to be aimed at or expressions of pious hope but requirements to be met. The second principle is that a plaintiff should not in the ordinary way be denied an adjudication of his claim on its merits because of a procedural default, unless the default causes prejudice to his opponent for which an award of costs cannot compensate…. Further, an extension of time is an indulgence from the court by a party in default. He is not entitled to an extension. He has no reasonable or legitimate expectation of receiving one. His only reasonable or legitimate expectation is that the discretion relevant to his application to extend time will be exercised judicially in accordance with established principles of what is fair and reasonable. In those circumstances, it is incumbent on the applicant for an extension of time to provide the court with a full, honest and acceptable explanation of the reasons for the delay. He cannot reasonably expect the discretion to be exercised in his favour, as a defaulter, unless he provides an explanation for the default.”

6. In Wasike V Swala [1984] KLR 591 the Court laid a hierarchy of factors to consider when granting an extension to file an appeal out of time. It stated that: “an applicant must now show, in descending scale of importance, the following factors: - a) that there is merit in his appeal. b) That the extension of time to institute and/or file the appeal will not cause undue prejudice to the respondent; and c) That the delay has not been inordinate.”

7. The Tribunal, guided by the principles set out in Wasike V Swala [1984] KLR 591, Joseph Ondiek Tumbo v Sony Sugar Co Ltd [2014] eKLR and Section 13 of the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”) relied on the following criteria to consider the application:a.Whether the appeal is merited?b.Whether there will be prejudice suffered by the Respondent if the extension is granted?c.Whether the Application for extension has been brought without undue delay?d.Whether there is a reasonable cause for the delay?

Whether the Appeal is merited. 8. An appeal being merited does not mean that it should necessarily succeed rather it is arguable. In Kenya Commercial Bank Limited Vs Nicholas Ombija (2009) eKLR the court held that: “an arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully before the court.”

9. The Tribunal examined the proposed memorandum of appeal and statement of facts. In the memorandum of appeal, the Applicant argued that the Respondent partially allowed some invoices but disallowed others. The Applicant also accused the Respondent of ignoring documentary evidence that it provided. Upon examining the proposed memorandum of appeal and statement of facts and the supporting documentary evidence, the Tribunal is of the view that the Applicant has an arguable case.

Whether there will be prejudice suffered by the Respondent if the extension is granted? 10. In Patrick Maina Mwangi v Waweru Peter [2015] eKLR the Court quoted the finding in United Arab Emirates v Abdel Ghafar & Others 1995 IR LR 243 and stated as follows: ‘‘a plaintiff should not in the ordinary way be denied an adjudication of his claim on its merits because of a procedural default, unless the default causes prejudice to his opponent for which an award of cost cannot compensate.”

11. The Tribunal has already noted that the Respondent’s response is not on record therefore, the Respondent did not demonstrate how it would suffer prejudice if the prayer for expansion of time was granted. Secondly, the Tribunal's view is that the Respondent would otherwise still collect the taxes together with penalties and interest should the Applicant be found to be at fault.

12. The Tribunal, therefore, finds that the Respondent will not suffer prejudice if the extension is granted.

Whether there is a reasonable cause for the delay? 13. In considering what constitutes as a reasonable cause for the delay, the court in Balwant Singh v Jagdish Singh & Ors (Civil Appeal No.1166 of 2006), held that: “The test is whether or not a cause is sufficient to see whether it could have been avoided by the party by the exercise of due care and attention.”

14. The Applicant argued that it filed the appeal via electronic mail on 1st April, 2021. The Tribunal examined the adduced evidence to confirm this assertion. The Tribunal established that the Applicant’s advocate forwarded the appeal documents to this Tribunal via email taxtribunalcbc@gmail.com on the stated date. On the 9th April 2021, this Tribunal via electronic mail advised the Applicant to forward filing fees banking slip. The Tribunal had an opportunity to peruse the Applicant’s bank slip of 9th April 2021 evidencing payment of the filing fees.

15. The Applicant stated that it has been following up with the secretariat concerning the appeal. The Applicant was advised to file the Appeal afresh through e-filing system.

16. Based on the foregoing, the Tribunal is of the view that the Applicant cannot be blamed entirely for the delay. The Tribunal is also of the further view that the delay has been explained to the satisfaction of the Tribunal.

Disposition 17. Given the foregoing, the application is meritorious and the Tribunal accordingly proceeds to make the following Orders:a.The Applicant be and is hereby granted leave to file an appeal out of time.b.The Notice of Appeal, the Memorandum of Appeal and Statement of Facts dated 1st April 2021 are deemed as duly filed and properly on record.c.The Respondent to file and serve its Statement of Facts within Thirty (30) days of the date of this Ruling.d.No orders as to costs.

18. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 26TH DAY OF JULY, 2024. CHRISTINE A. MUGA - CHAIRPERSONBONIFACE K. TERER - MEMBERDELILAH K. NGALA - MEMBERGEORGE KASHINDI - MEMBEROLOLCHIKE S. SPENCER - MEMBER