[2022] KEHC 10203 (KLR)

Republic v Commissioner of Income Tax & another; Equitorial Commercial Bank Ltd (now known as Spire Bank Ltd) (Exparte) (Judicial Review Miscellaneous Application 437 of 2004) [2022] KEHC 10203 (KLR) (Judicial Review) (7 July 2022) (Ruling)

Neutral citation: [2022] KEHC 10203 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Judicial Review

Judicial Review Miscellaneous Application 437 of 2004

AK Ndung'u, J

July 7, 2022

Between

Republic

Applicant

and

Commissioner of Income Tax

1st Respondent

Kenya Revenue Authority

2nd Respondent

and

Equitorial Commercial Bank Ltd (now known as Spire Bank Ltd)

Exparte

Ruling

1. This ruling is in respect of the application by way of Notice of Motion dated 15th March 2021 in which Equatorial Commercial Bank Limited (now known as Spire Bank Ltd) (hereinafter the applicant) seeks orders:1. Spent2. That the Honourable Court be pleased to enlarge time granted to the Ex-Parte applicant to fix the matter for hearing and reinstate the suit for hearing.3. That following (2) above, the Honourable Court be pleased to fix the matter for directions.

2. The application is premised on grounds:1. That on 29th September, 2020, the Honourable Court issued directions ordering the Ex-parte Applicant to fix the matter for hearing within 90 days from the said date in default of which the suit shall stand dismissed with no orders as to cost.2. That the court further directed the Respondent’s Counsel to effect service of the directions to the ex-parte applicant by email and registered mail.3. That the ex parte applicant was served with the documents by mail which was received by the Ex-parte applicant on 4th February, 2021. 4.That however, the same was not immediately forwarded to the legal department for action until 10th March, 2021 owing to internal breakdown in communication occasioned by measures put in place to combat covid-19. 5.That the Ex-parte applicant is desirous of prosecuting the suit to its logical conclusion.6. That time given by the court by the court to fix the matter for hearing has expired and the suit stands dismissed by effluxion of time.7. That it is fair and just that the ex-parte applicant be granted more time to comply with the directions of the court.8. That the Respondents will not suffer any prejudice.

3. It is supported by an affidavit sworn by John Wageche on the 17th day of March 2020.

4. The gist of the application as gleaned from the grounds and the supporting affidavit is that the applicant was unable to comply with the directions of court made on 29th September, 2020 requiring it to fix the matter for hearing within 90 days from the said date in default of which the suit stood dismissed. It is explained that the said directions were served on the applicant on the 4th February, 2021 by email. It was not until 10th March, 2021 that the documents were forwarded to the legal department of the applicant owing to internal breakdown in communication occasioned by measures put in place to combat Covid-19.

5. It is in the applicant’s case that it is desirous of prosecuting the case and more time is sought to comply with the directions.

6. The application is opposed. Zipporah Mambo, an advocate of the High Court practising within Kenya Revenue Authority has sworn a replying affidavit in which she gives an insight into the history of the matter.

7. Mambo deponses that the applicant commenced this suit on the 2nd April, 2004 to challenge a demand of Ksh. 50,223,476. 30 by the 1st Respondent on account of outstanding taxes. Pleadings were exchanged but the files went missing as the parties waited to be heard.

8. The 1st and 2nd Respondents subsequently obtained an order for the reconstruction of the court file. Despite several mentions with service on the applicant, the applicant made no appearance and on 29th September, 2020, the court directed that the matter be set down for hearing in 90 days in default of which the suit was to stand dismissed.

9. Mambo avers that by a letter dated 5th October, 2020 to the applicant by registered post, the court order of 29th September, 2020 was served by the advocates for the 1st and 2nd Respondent. Service of the same was also effected via email on the same date. The assertion by the applicant that the subject email was received on the 4th February, 2020 is misleading since communication by email is faster taking a few minutes if not seconds to be delivered.

10. Mambo urges that the application to reinstate the suit is meant to delay the Respondents form enforcing payment of collectable taxes and it is an abuse of the court process as the applicant had adequate time to set down the suit for hearing.

Submissions: 11. The applicant’s submissions are dated 11th June, 2021. Counsel for the applicant opines that the sole issue for determination is whether the applicant has met the threshold for grant of orders enlarging time to enable it comply with the directions of court.

12. It is submitted that order 50 Rule 6 provides as follows:“…where a limited time has been fixed for doing any act or taking any proceedings under these Rules, or by summary notice or by order of the court, the court shall have power to enlarge such time upon such terms (if any) as the justice of the case may require, and such enlargement may be ordered although the application for the same is not made until after the expiration of the time appointed or allowed.”

13. It is further urged that Section 95 of the Civil Procedure Act provides that:“where any period is fixed or granted by the court for the doing of any act prescribed or allowed by this Act, the court may, in its discretion, from time to time, enlarge such period, even though the period originally fixed or granted may have expired.”

14. Counsel submits that the above provisions clothe the court with unfettered discretion to enlarge time where, inter alia the court has by its orders or directions fixed the time of doing an act. It is urged that the delay in fixing the matter was due to factors beyond the control of the applicant.

15. For the 1st and 2nd Respondents, it is submitted that the matter sought to be reinstated has been in court for 18 years. The applicant has not been vigilant in its prosecution. The applicant has the primary duty to prosecute the case by taking steps to progress the case after dragging the respondents to court.

16. Counsel urges that no evidence has been adduced to prove that the applicant was keen on pursuing the matter to the very end. It is contended that the applicant abdicated that duty to the respondents. The court is invited to consider the public interest in the matter given that the matter involves collection of revenue which is key in the development of the economy.

17. For the proposition that the power to reinstate a suit is discretionary, counsel cites the decision in Beverage Bottlers (SA) Ltd (in Liquidation) & Arvo Vs. Abode Enterprises Pty Let [2009] SASC 272, a decision in South Australia that was cited with approval in Registered Trustees of Micro Enterprises Support Programme Trust (MESPT vs. Kyome Fresh Co. Ltd & 3 others [2020] eKLR by Kasango J, while considering an application for reinstatement where she stated:“There must come a time when the party has so conducted the litigation that it would be appropriate to shut that party out of the party’s litigation even if the point is arguable. Justice delayed can be justice denied. Both the Plaintiff and the Defendant are entitled to justice. If the Plaintiff has conducted his or her case so that the Defendant has suffered prejudice or will suffer injustice in defending the case then the Defendant is entitled to justice, and justice can only be achieved by shutting the Plaintiff out of his or her case.There comes a time when (the Defendant) is entitled to have some piece of mind and to regard the incident as closed. The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.”

18. I have had occasion to consider the Notice of Motion dated 15th March, 2021, the grounds relied upon and the supporting affidavit. I have had due regard to the replying affidavit and learned submissions by counsel. As correctly captured by counsel for the applicant, the only issue for determination is whether the applicant has met the legal threshold for grant of orders enlarging time to enable it comply with the directions of court given on 29th September, 2020.

19. Chesoni J, in a decision made in years gone by succinctly put the factors taken into account or consideration for the purpose of reinstatement of suits inIvita vs. Kyumbu [1984] KLR 441 where he stated:“The test is whether the delay is prolonged and inexcusable, and, if it is, can justice be done despite such delay. Justice is justice to both the Plaintiff and Defendant; so both parties to the suit must be considered and the position of the judge too, because it is no easy task for the documents, and, or witnesses may be missing and evidence is weak due to the disappearance of human memory resulting from lapse of time. The Defendant must however satisfy the court that it will be prejudiced by the delay or even that the plaintiff will be prejudiced. He must show that justice will not be done in the case due to the prolonged delay on the part of the plaintiff before the court will exercise its discretion in his favour and dismiss the action for want of prosecution. Thus, even if delay is prolonged if the court is satisfied with the plaintiff's excuse for the delay, the action will not be dismissed, but it will be ordered that it be set down for hearing at the earliest available time.”

20. Reinstatement of a suit is at the discretion of the court, which discretion ought to be exercised in a just manner, as was held in Bilha Ngonyo Isaac vs. Kembu Farm Ltd & another & another [2018] eKLR which echoed the decision of the court in Shah vs. Mbogo & Another (1967) EA 116 (Harris J), where the court stated on the matter of discretion:“The discretion is intended so as to be exercised to avoid injustice or hardship resulting from inadvertence or excusable mistake or error but is not designed to assist a person who has deliberatively sought whether by evasion or otherwise to obstruct or delay the course of justice.”

21. In Mobile Kitale Service Station vs. Mobil Oil Kenya Limited & another [2004] eKLR (Warsame J) where it was held:“I must say that the Courts are under a lot of pressure from backlogs and increased litigation, therefore it is in the interest of justice that litigation must be conducted expeditiously and efficiently so that injustice caused by delay would be a thing of the past. Justice would be better served if we dispose matters expeditiously. Therefore, I have no doubt the delay in the expeditious prosecution of this suit is due to the laxity, indifference and/ or negligence of the plaintiff. That negligence, indifference and/or laxity should not and cannot be placed at the doorsteps of the defendant. The consequences must be placed on their shoulders.”

22. Before this court is a litigation that was commenced way back on 2nd April 2004. Along the way and in what is surely a blot on our Court’s Registry operations the court filed went missing. It took the efforts of the 1st and 2nd Respondents vide their application dated 20th November, 2018 to have the court file reconstructed. Evidence abounds of numerous times the matter was mentioned in court in the absence of the Applicant despite clear evidence of service. The court apparently exasperated with the state of affairs, but still intent on affording the Applicant its day in court gave directions on 29th September, 2020 that the matter be fixed for hearing in 90 days in default of which the matter would stand dismissed.

23. The Applicant’s mainstay in the application is that the said directions were only served on them on 4th February, 2021 and by then Covid-19 protocols were in place hence the delay. This assertion is rebutted with evidence of service by the 1st and 2nd Respondents on 5th October, 2020 by way of registered post and via email.

24. Even assuming the service of the directions was on 4th February 2021, this court was surprised by the nonchalant approach given to this application by the applicant. Away from the penultimate directions of the court of 29th September 2020, there is no attempt at all by the Applicant to explain away the long history of inaction in the matter. It does not help matters that even when the court file went missing it is not the Applicant who moved the court for its reconstruction but the 1st and 2nd Respondent. The Applicant seems content to explain away the delay after the Directions of Court were given but fails to explain the laxity exhibited hitherto. Warsame J (as he then was), would seem to have been speaking of this matter when in Mobile Kitale Service Station vs. Mobil Oil Kenya Limited & Another(supra) he stated;“Therefore, I have no doubt the delay in the expeditious prosecution of this suit is due to the laxity, indifference and/ or negligence of the plaintiff. That negligence, indifference and/or laxity should not and cannot be placed at the doorsteps of the defendant. The consequences must be placed on their shoulders.”

25. Not even the heavy public interest in the matter seems to have jolted the Applicant to action. The matter revolves around a dispute over taxes between the collector and the Applicant. The faster the matter is resolved the better for the Applicant and for the general public good where if any taxes are found due, they would be paid and the country benefits. As it were, one may be forgiven for drawing the inference that the Applicant is deliberately obstructing that process.

26. The conduct of the Applicant in this matter shears away any likelihood of the court exercising discretion in its favour. Am persuaded that the circumstances of this case do not warrant the exercise of the discretion to enlarge time in favour of the Applicant.

27. I find and hold that the application herein has no merit and I make the following orders;1. The Notice of Motion dated 15th March 2021 is dismissed.2. The 1st and 2nd Respondents shall have the costs of the application to be agreed or otherwise taxed by the Taxing Master of this court.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 7THDAY OF JULY 2022. ............................A.K. NDUNGUJUDGE