[2020] KEHC 1198 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

JUDICIAL REVIEW APPLICATION NO. 94 OF 2020

IN THE MATTER OF AN APPLICATION FOR LEAVE

FOR JUDICIAL REVIEW ORDERS OF MANDAMUS

BETWEEN

REPUBLIC.........................................................................APPLICANT

VERSUS

CABINET SECRETARY FOR TREASURY.............1ST RESPONDENT

NATIONAL COUNCIL FOR PERSONS

WITH DISABILITY................................................2ND RESPONDENT

AND

KENYA REVENUE AUTHORITY........................INTERESTED PARTY

EX- PARTE APPLICANT:

THERESA ONGORE AUMA

JUDGMENT

1. The application that is before this Court for determination is a Notice of Motion dated 11th May, 2020 filed by the ex parte Applicant herein, Theresa Ongore Auma (hereinafter referred to as “the ex parte Applicant”) in which she was seeking the following orders:-

1. THAT this Court be pleased to grant a judicial review order of Mandamus to compel the Respondents herein to renew the Tax Exemption Certificate of the ex parte Applicant.

2. Costs be provided for.

2. The application is supported by a statutory statement dated 6th May, 2020 and a supporting affidavit sworn by the Applicant on 6th May, 2020. The ex parteApplicant states that she is an adult female of sound mind and working for gain as a nurse at the Kenyatta National Hospital. She has sued the Cabinet Secretary for Treasury as the 1st Respondent in this matter, and the National Council for Persons with Disability, which is set up under the Persons with Disability Act as the 2nd Respondent. The ex parte Applicant also joined the Kenya Revenue Authority as an Interested Party in the suit.

3. The said Respondents did not file any response to the ex parte Applicant’s application, while the Interested Party filed its Grounds of Opposition dated 6th July, 2020. A summary of the pleadings and submissions filed by the participating parties is provided in the next sections.

The ex parte Applicant’s case

4. The ex parteApplicant deponed that on 15th November, 2010, she was involved in a road traffic accident where she sustained a swollen right ankle/foot and fracture of the right calcaneus, which fracture was managed by open reduction and internal fixation. She contended that on diverse dates, she was attended to by Prof. J. A. O. Mulimba, a consultant as an Orthopaedic and Trauma Surgeon who indicated in his medical report dated 29th August, 2018 thus

“This patient, injured her right foot in which she fractured her the right calcaneus in a road traffic accident. She was treated conservatively. The fracture has healed. The calcaneus has developed sclerosis and osteoarthritis between it and the talus. The foot is developing osteoarthritis in other parts. She walks with the help of a single walking stick, she is in a lot of pain. This patient is disabled and at 61 years she would be accorded the benefits of disability. Getting more medical reports is not going to right anything”.

5. Further, that she was also attended to by a Dr. Ezekiel Oburu, a consultant Orthopaedic Surgeon, who indicated in his medical report dated 22nd February, 2019 that she has permanent disability and with need for compensation for the same. The Cabinet Secretary for treasury Applicant stated that she is registered by the National Council for Persons with Disabilities as a person living with disability vide Registration No: NCPWD/P/153320, and that a registration card was issued to her on 20th March, 2016.

6. In addition, that section 35(1) of the Persons with Disabilities Act, 2003 provides that persons with disabilities who are in receipt of an income may apply to the Minister responsible for finance for exemption from Income Tax and any other levies on such income, and that she was accordingly issued with an Income Tax Exemption Certificate of persons with Disabilities. Further, that on 9th September, 2019, the Executive Officer of Kenyatta National Hospital wrote to the Commissioner General Kenya Revenue Authority, requesting that her Income Tax Exemption Certificate be renewed. She annexed copies of the Tax Exemption Certificate.

7. The ex parteApplicant averred that the National Council for Persons with Disability declined to respond to the Commissioner of Income Tax to renew her Income Tax Exemption Certificate. She contended that she appealed that decision, and her lawyers also wrote to the 2nd Respondent, and that to date, no response had been forthcoming. In conclusion, she deponed that it is in the interest of justice that the order sought be granted as prayed to forestall a travesty of justice.

8. The ex parte Applicant’s advocates on record, Prof. Kiama Wangai & Company Advocates filed written submissions dated 23rd July, 2020. Counsel submitted that the Respondents have refused, failed and/or neglected to renew the tax exemption certificate of the ex parte Applicant, and that this is a straight forward application in that the 2nd Respondent having registered the ex parte Applicant as persons living with disability Registration No: NCPWD/P/153320, on the 20th March, 2016, and having issued the ex parte Applicant with an Income Tax Exemption Certificate of Persons with Disabilities, could not now purport not to renew the same. In conclusion, counsel submitted that the disability in issue is permanent in nature as evidenced by the annexed medical documents, and this position has not changed.

The Interested Party’s case

9. The Interested Party stated that the instant suit does not disclose a cause of action against it, and that it is the function of the 2nd Respondent under the Persons with Disabilities Act to register persons with disability under section 7(c) of the Act. Further, that under Section 35(1) of the Persons with Disabilities Act, it is the function of the 1st Respondent to consider an application for exemption of payment of taxes or levies. In addition, that under section 42 of the Act, no person is eligible for an exemption unless the exemption or deduction has been recommended by the 2nd Respondent and approved by the 1st Respondent. Therefore, that the Interested Party has no role on this matter, and under section 37 of the Tax Procedures Act, if it were to note any inequity or hardship in collecting tax from a taxpayer, it cannot refrain from collecting the taxes without approval from the 1st Respondent.

10. According to the Interested Party, the 1st Respondent and the 2nd Respondent also are guided by Article 201 of the Constitution while granting an exemption, so that the burden of taxation is shared fairly, and if in their opinion the ex parte Applicant no longer suffers a disability that warrants her to be entitled to an exemption, then the same is done in good faith and in the public interest. Furthermore, that even if the 1st and 2nd Respondent consider an applicant eligible for a tax exemption, the same can still be refused on the basis that it has not been provided for in the allocation of public resources under section 42(c) of the Persons with Disability Act, and this therefore relegates a tax exemption to a privilege that is not absolute.

11. Lastly, the Interested Party contended that it has neither made an administrative decision worth being quashed by this Court, nor has it refused to make an administrative decision warranting orders of mandamus against it, and only the 1st and 2nd Respondents have a stake in this matter.

12. The Interested Party’s counsel, Marigi John Advocate, filed written submissions dated 16th October, 2020. Counsel relied on and reiterated the arguments made in its Grounds of Opposition. It was also submitted that having them participate in this suit when there is no clear cause of action against them or their demonstrable interest, was unwarranted. It was further submitted that the 1st Respondent alone has the prerogative to recommend a taxpayer for exemption from payment of taxes under section 35(2) of the Persons with Disabilities Act, and it is therefore the function of the Respondents to assess the suitability of any applicant from exemption of payment of taxes. Furthermore, that a tax exemption is not an absolute right as is clearly stated in section 42(1)(c) of the Persons With Disabilities Act which provides that an exemption or deduction may be refused on the basis that it has not been provided for in the allocation of public resources.

13. Lastly, the counsel for the Interested Party submitted that being registered as a person with disability is not an automatic qualification for exemption and that not every disability qualifies for exemption. that the fact that a taxpayer got an exemption last year on the basis of their disability does not necessarily qualify them for an exemption the next year or indeed forever. He contended that that is why there is the process of renewal, and relied on the decision in the case of Republic vs Public Procurement Administrative Review Board & 2 Others Ex-Parte Pelt Security Services Limited[2018] eKLR,for the holding that the purpose of judicial review is to prevent statutory bodies from injuring the rights of citizens by either abusing their powers in the execution of their statutory duties and function or acting outside of their jurisdiction, and cannot be used to curtail or stop statutory bodies or public officers from the lawful exercise of power within their statutory mandates.

14. Counsel contended that what is before the court is basically an appeal and not a judicial review application, and that the sins of the Respondents have not been demonstrated. Furthermore, that the ex parte Applicant has not made a case directly against the Interested Party.

The Determination

On the Interested Party’s Joinder

15. A preliminary issue was raised by the Interested Party as regards its joinder in this suit, and it claimed there is no cause of action or orders sought against it. Although the Interested Party did not make any application to be struck out of these proceedings, and participated fully herein, it is necessary at the outset to confirm if its joinder in this suit was proper.

16. The principles that guide joinder of interested parties in judicial review proceedings are set out in Order 53 rule 3(2) and (4) of the Civil Procedure Rules which provides as follows:

(2) The notice shall be served on all persons directly affected, and where it relates to any proceedings in or before a court, and the object is either to compel the court or an officer thereof to do any action in relation to the proceedings or to quash them or any order made therein, the notice of motion shall be served on the presiding officer of the court and on all parties to the proceedings.

(4) If on the hearing of the motion the High Court is of the opinion that any person who ought to have been served therewith has not been served, whether or not he is a person who ought to have been served under the foregoing provisions of this rule, the High Court may adjourn the hearing, in order that the notice may be served on that person, upon such terms (if any) as the court may direct.

17. Therefore, where an applicant or the Court is of the view that a person ought to be joined to the proceedings the that person be joined notwithstanding that such a person has not made an application to be joined. Likewise, the Supreme Court in Trusted Society of Human Rights Alliance vs Mumo Matemo & 5 Others [2014]eKLR defined an interested Party as follows:

“Consequently, an interested party is one who has a stake in the proceedings, though he or she was not party to the cause ab initio. He or she is one who will be affected by the decision of the Court when it is made, either way. Such a person feels that his or her interest will not be well articulated unless he himself or she herself appears in the proceedings, and champions his or her cause.”

18. A person is thus directly affected or legally interested in the proceedings if the suit will lead to a result that will affect him by either establishing or curtailing his or her legal rights. The Interested Party herein is the government authority charged with the duty of collection of revenue, including imposition of taxed. It also issues the Certificate of Exemption of Tax that is sought to be renewed by the ex parte Applicant. Therefore, any decision to regards the tax exemption status of the ex parte Applicant will directly affect the Interested Party, and it is therefore properly joined in these proceedings for these reasons.

On the Order of Mandamus

19. The main issue for determination herein is whether the order of mandamus sought by the ex parte Applicant can issue in the circumstances of this case. An order of mandamus in this regard requires a public body to do some particular act as specified in the order, to enforce public law duties.

20. The Court of Appeal in the case of Republic vs. Kenya National Examinations Council ex parte Gathenji & Others, (1997) e KLRexplained the applicable principles for an order of mandamus to issue as follows:

“The next issue we must deal with is this: What is the scope and efficacy of an ORDER OF MANDAMUS? Once again we turn to HALSBURY’S LAW OF ENGLAND, 4th Edition Volume 1 at page 111 FROM PARAGRAPH 89. That learned treatise says:-

“The order of mandamus is of a most extensive remedial nature, and is, in form, a command issuing from the High Court of Justice, directed to any person, corporation or inferior tribunal, requiring him or them to do some particular thing therein specified which appertains to his or their office and is in the nature of a public duty. Its purpose is to remedy the defects of justice and accordingly it will issue, to the end that justice may be done, in all cases where there is a specific legal right and no specific legal remedy for enforcing that right; and it may issue in cases where, although there is an alternative legal remedy, yet that mode of redress is less convenient, beneficial and effectual.”

At paragraph 90 headed “the mandate” it is stated:

“The order must command no more than the party against whom the application is made is legally bound to perform. Where a general duty is imposed, a mandamus cannot require it to be done at once. Where a statute, which imposes a duty leaves discretion as to the mode of performing the duty in the hands of the party on whom the obligation is laid, a mandamus cannot command the duty in question to be carried out in a specific way.”

What do these principles mean? They mean that an order of mandamus will compel the performance of a public duty which is imposed on a person or body of persons by a statute and where that person or body of persons has failed to perform the duty to the detriment of a party who has a legal right to expect the duty to be performed….”

21. In Republic vs. Town Clerk, Kisumu Municipality, Ex Parte East African Engineering Consultants [2007] 2 EA 441, it was held that an order of mandamus compels a public officer to act in accordance with the law. The main principles that apply therefore for an order of mandamus to issue are firstly, that the Court will only issue a mandatory order if it concludes that it is the only decision lawfully open to the public body, and there is no other legal remedy that is available to remedy the infringement of a legal right.

22. Secondly, the Court will only compel the satisfaction of a public duty if it has become due, and if or where there is a condition precedent necessary for the duty to accrue, an order of mandamus will not be granted until that condition precedent comes to pass. Therefore, where there is a dispute as to whether a public duty has crystallised, the Court will not by an order of mandamus compel the Respondent to exercise that duty until the dispute is sorted out. Lastly, whereas the Court may compel the performance of the public duty where such duty is shown to exists, it will however not compel its performance or the exercise of its discretion in a particular manner.

23. In the present case, the ex parte Applicant has relied on section 35 of the Persons with Disabilities Act, to urge that the Respondents are under a duty to issue her with a tax exemption certificate. She has annexed the medical reports relied upon, a copy of her registration as a person with disability issued to her on 20th March, 2016, and an Income Tax Exemption Certificate of persons with Disabilities issued to her for five years from 1st October 2013 to 1st October 2018. She also annexed correspondence on the renewal of the said tax exemption certificate.

24. Section 35 in this regard provides as follows on the exemptions that are available to persons with disability:

(1) All persons with disabilities who are in receipt of an income may apply to the Minister responsible for finance for exemption from income tax and any other levies on such income.

(2) The Minister responsible for finance may, by notice in the Gazette, prescribe the procedure for application for and grant of exemption under this section.

(3) Materials, articles and equipment, including motor vehicles, that are modified or designed for the use of persons with disabilities shall be exempt from import duty, value added tax, demurrage charges, port charges and any other government levy which would in any way increase their cost to the disadvantage of persons with disabilities.

(4) All goods, items, implements or equipment donated to institutions and organizations of or for persons with disabilities shall be exempt from import duties, value added tax, demurrage charges, port charges and any other government levy which would in any way defeat the purposes of or increase the cost of the said donations.

25. Certain conditions and procedures that apply before the said exemption can be granted are set out in section 42 of the Act as follows:

(1) The following apply with respect to exemptions and deductions described in subsection (2)—

(a) no person is eligible for an exemption or deduction unless the exemption or deduction has been recommended by the Council and approved by the appropriate government authority;

(b) no person is eligible for an exemption or deduction unless any additional requirements or conditions prescribed in the regulations made by the Minister are satisfied;

(c) an exemption or deduction may be refused on the basis that it has not been provided for in the allocation of public resources.

(2) The exemptions and deductions referred to in subsection (1) are the exemptions and deductions under the following— (a) section 12; (b) section 16; (c) section 35; (d) section 36(1); and (e) section 40.

26. The ex parte Applicant in this respect provided evidence of an email from an officer of the 1st Respondent, which is the council referred to in section 42(1), dated 8th November (year not specified), which read as follows:

“Dear Theresa,

Reference is made to your application for renewal of Tax Exemption.

Upon consideration of your application and appearance before the Vetting Committee in September 2018, we wish to advise that your application was not successful. The Committee was of the view that the nature of disability did not meet the threshold for grant of tax exemption. Your disability was considered very minimal and or negligible and therefore the Committee was of the opinion that your disability cannot adversely affect the performance of your day to day duties. As a consequence, the Council is not recommending you to KRA for Tax Exemption.

Should you be aggrieved by the decision of the Committee, you can prefer an appeal to the Cabinet Secretary, National Treasury through the Executive Director, NCPWD.

Akarah

27. The ex parte Applicant thereupon appealed to the 1st Respondent by way of a letter dated 13th November 2018 disputing inter alia that her disability was minimal or negligible, and the allegation that the same cannot adversely affect the performance of day to day duties. Subsequently, on 3rd February 2020 her advocates on record wrote to the 2nd Respondent a demand letter that the said Respondent writes to the Commissioner General, Kenya Revenue Authority, to process the ex parte Applicant’s Tax Exemption Certificate. Copies of both letters were annexed.

28. It is evident from the documents presented and relied upon by the ex parte Applicant that there is a pending dispute as regards the extent of her disability, and whether it meets the threshold required for tax exemption. This dispute needs to be resolved first before an order of mandamus can issue, and its resolution will require adducing of evidence and argument, which is not the province of a judicial review Court. Secondly, it is also evident that the 2nd Respondent has already declined to recommend the ex parte Applicant for tax exemption. In the circumstances the appropriate remedy is not mandamus, but to appeal the decision as the 2nd Respondent has performed its duty as required by section 42 of the Persons with Disabilities Act of recommending exemption or otherwise.

29. In addition, there is evidence that an appeal was made against the 2nd Respondent’s decision by the ex parte Applicant to the 1st Respondent, on which there is no response on record. It is the view of this Court that an order of mandamus against the 1st Respondent may not be the appropriate remedy in the circumstances, for two reasons.

30. Firstly, this Court as a judicial review Court cannot usurp the 1st Respondent’s role and duty as regards the issue of tax exemption certificates, and is also not seized of the facts and information to be able to compel the 1st Respondent to make such an order, especially in light of the conditions set out in section 42 of the Act that first require to be met. In this regard, the evidence presented also shows that the condition of a prior recommendation by the 2nd Respondent is yet to be met. Secondly, as explained in the foregoing, this Court can also not compel the 1st Respondent to exercise its discretion in a particular manner.

The Disposition

31. In the premises, this Court finds that the order of Mandamus sought in the ex parte Applicant’s Notice of Motion application dated 11th May, 2020 cannot issue for the foregoing reasons. The said application is accordingly declined.

32. There shall be no order as to the costs of the Notice of Motion application dated 11th May, 2020.

33. Orders accordingly.

DATED AND SIGNED AT NAIROBI THIS 4TH DAY OF DECEMBER 2020

P. NYAMWEYA

JUDGE

FURTHER ORDERS ON THE MODE OF DELIVERY OF THIS JUDGMENT

In light of the declaration of measures restricting Court operations due to the COVID -19 Pandemic, and following the Practice Directions issued by the Honourable Chief Justice dated 17th March 2020 and published in the Kenya Gazette on 17th April 2020 as Kenya Gazette Notice No. 3137, this judgment will be delivered electronically by transmission to the email addresses of the ex parteApplicant’s, Respondent’s and Interested Party’s Advocates on record.

P. NYAMWEYA

JUDGE