[2022] KEHC 17151 (KLR)

Republic v Unclaimed Financial Assets Authority; Britam Holdings PLC & 3 others (Exparte) (Judicial Review Application 148 of 2019) [2022] KEHC 17151 (KLR) (Judicial Review) (8 December 2022) (Ruling)

Neutral citation: [2022] KEHC 17151 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Judicial Review

Judicial Review Application 148 of 2019

AK Ndung'u, J

December 8, 2022

Between

Republic

Applicant

and

Unclaimed Financial Assets Authority

Respondent

and

Britam Holdings PLC

Exparte

Britam Life Assurance Company (Kenya) Limited

Exparte

Britam General Insurance Company (Kenya) Limited

Exparte

Britam Asset Managers (Kenya) Limited

Exparte

Ruling

1. The 1st ex parteApplicant, Britam Holdings Plc, is the holding company of the 2nd, 3rd, and 4thex parte Applicants. It was issued with demand letters: the first letter dated April 26, 2019 demanding the payment of Kshs 56,484,056. 00 being unclaimed assets and Kshs 3,997,835. 00 being audit fees and to report the identified unclaimed shares totalling 21,117,784 units; and the second letter dated May 6, 2019 confirming the penalties payable as computed in the [draft] audit report by PwC -dated the April 17, 2019 - totalling Kshs 79,790,958. 00. Both letters were issued by the Respondent herein, the Unclaimed Financial Assets Authority.

2. Dissatisfied with the decisions in the issued demand letters, the ex parte Applicants approached this court for legal redress, to forestall any enforcement action or proceedings on the part of the Respondent.

3. Pursuant to leave granted on May 26, 2021and by way of a Notice of Motion dated July 9, 2021 - under Sections 7(2), 9, 11(1) and (2) of the Fair Administrative Actions Act, Sections 8 and 9 of the Law Reform Act, Cap 26 Laws of Kenya, Order 53 Rule (1) and (3) of the Civil Procedure Rules - the ex-parte Applicants sought for the following Orders:i.Certiorari to remove into the High Court and quash the demand letter dated April 26, 2019 issued against the 1st ex-parte Applicant, demanding the payment of Kshs 56,484,056. 00 being unclaimed assets and Kshs 3,997,835. 00 being audit fees and to report the identified unclaimed shares totalling 21,117,784 units.ii.Certiorari to remove into the High Court and quash the letter dated May 6, 2019 issued against the 1st ex-parte Applicant, confirming the penalties payable as computed in the audit report by PricewaterhouseCoopers [“PwC”] dated the April 17, 2019 totaling Kshs 79,790,958. 00. iii.Prohibition directed at the Respondent prohibiting and restraining the Respondent whether acting directly or through any of their agents, employees and/or officers from issuing, executing, enforcing and/or implementing any or any further decisions, demands or notices as against the ex-parte Applicants on the basis of the PricewaterhouseCoopers [“PwC”] Audit Report dated the April 17, 2019. iv.Declaration that the provisions of section 52(5) of the Unclaimed Financial Assets Act is unconstitutional, and to the extent of the unconstitutionality, null and void.v.Declaration that in assessing the interest and penalties payable by the Applicants [or any other person or holder] under the provisions of sections 33(4) of the Unclaimed Financial Assets Act, the Respondent has a constitutional, statutory and legal duty and obligation to consider relevant mitigating factors and give reasons for applying any penalty [highest or lowest] provided for in law.vi.Costs to be borne by the Respondent.

4. The Application was supported by an amended Statutory Statement dated July 9, 2021; a Supporting Affidavit dated May 10, 2021 sworn by Nancy Kiruki, (the Director Legal and Company Secretary of the 1stex parte Applicant, who is also the Company Secretary of the 2nd, 3rd, and 4th ex parteApplicants); and a Further Affidavit dated 31st August 2021 sworn by Jackson Kiboi (Head of Legal of the 2nd ex-parte Applicant).

5. Attached to theex parte Application were annexures such as the demand letters, reports, correspondence, payment documents, forms, and other documents.

6. The ex parte Applicant, in sum, challenged the decision in the demand letters dated April 26, 2019 and May 6, 2019 issued by the Respondent on account that the decisions therein failed to take into account relevant considerations and legitimate expectation, was in excess of jurisdiction and ultra vires, was tainted with illegality and procedural impropriety, was unreasonable, among other grounds stated by the Applicants.

The applicant’s case 7. The Applicant contended that by a contract entered into on the April 18, 2018, which contract was only seen by the ex-parte Applicants upon the filing of these proceedings, the Respondent, Unclaimed Financial Assets Authority (hereinafter “UFAA”] ostensibly engaged Messrs. PwC (hereinafter “the Auditor”) under the provisions of section 31(5) of the Unclaimed Financial Assets Act (hereinafter “the UFA Act or the Act”) to conduct an examination under Section 31(3) of the Act, and that the communication to this effect was received by the 1st ex-parte Applicant only from the Respondent through a letter dated May 4, 2018. That the scope of work of the Auditor was stated to be identification of unreported/unremitted qualifying unclaimed financial assets as per UFA Act, 2011.

8. The Applicant maintained that as per the Respondent’s own notice, the audit was to be directed only to the 1st ex-parte Applicant and not the 2nd, 3rd, and 4th ex-parte Applicants or to any of the 1stex parte Applicants related companies and or subsidiaries, as these remained separate and distinct entities in law. Also, that at no time, in the notification letter, did the Respondent inform any of the ex-parte Applicants that they would meet and settle the fees of the Auditor or what that amount would be.

9. That on having an exit meeting, with PwC and the Respondent on November 1, 2018, the 1st ex-parte Applicant issued a letter dated the November 8, 2018, addressing in detail issues of concern which it requested the Respondent and PwC to take into account and/correct prior to taking any further action with respect to the examination process.

10. The 1st ex parte Applicant stated that the Respondent, without responding to that letter, [Respondent] proceeded to issue the demand letter dated the April 26, 2019 and completely ignored the representations of the 1st ex-parte Applicant as contained in the letter of the November 8, 2019.

11. To the ex parteApplicants, the Respondent recognised their act of bad faith and malice on their part and they issued a letter dated May 6, 2019 [after it issued the demand letter] purporting to respond to the 1st ex parte letter dated November 8, 2018, wherein they dismissed all assertions made by the 1st ex-parte Applicant. Thus, as per the 1stex parte Applicant that action demonstrated complete procedural unfairness, abuse of power, and unfair administrative action, whose outcome was pre-determined.

12. It was the ex parte Applicant’s submission that despite the grave and serious concerns of non-compliance raised by the 1st ex-parte Applicant in its letter dated November 8, 2018, no action was taken by the Respondent. Further, that no steps have been taken by the Respondent, to date, hence necessitating the filing of the present proceedings.

13. In support of their case, theex parte Applicants, filed their written submissions dated April 24, 2022. They urge that the Respondent failed to take into account relevant considerations and legitimate expectations, the same being in breach of section 7(2)(f) of the Fair Administrative Action Act.

14. Particularly, that the Audit Report ultimately found that the ex-parte Applicants were holding on to assets classified as unclaimed assets under the Unclaimed Financial Assets Act and therefore, ought to surrender them to the Respondent. The findings were generally classified under five distinct headings, namely: cheques, drafts and similar instruments; matured life policies; death claims; surrendered life policies; and unremitted shares. The ex parte Applicant averred that they provided explanations on the same to the Respondent and the Auditor on numerous occasions challenging the findings of the Audit Report.

15. The ex parte Applicant maintained that they were compliant with the relevant law; and that the Auditor’s Report did not incorporate/consider the relevant and critical materials by the ex-parte Applicants while it ultimately absolves the ex-parte Applicants of any liability of breach of the relevant provisions of the Unclaimed Financial Assets Act.

16. The ex-parte Applicants posited that it had a legitimate expectation; that both the Auditor and the Respondent would give due weight and consideration of their numerous representations and communicate the outcome of that consideration in a clear and logical manner prior to issuing a final Audit Report and a Demand Letter. However, that the Respondent failed to do this and together with the Auditor and simply ignored the representations and documentation forwarded by the ex-parte Applicants.

17. The ex parte Applicants also submitted that the Respondent actions were in excess of jurisdiction and ultra vires, and in breach of section 7(2)(a)(i), (ii), and (iii) and section 7(2)(g) of the Fair Administrative Actions Act. In regard to engagement/appointment of the Auditor, firstly, it was the applicant’s position that this appointment was ultra vires the provisions of the Act as an agent appointed under Section 31(3) and (5) of the Acthas no mandate to (a) audit subsidiary or related companies of a holder (b) compute penalties and interest payable by a holder or (c) identify any other potential qualifying unclaimed assets not categorized by the Act for consideration by the Authority. That the authority is limited to examine the records of Britam Holdings PLC to determine its compliance with UFA Act, and that the auditor acted pursuant to delegated power in contravention of the law prohibiting such delegation.

18. Secondly, the contract between the Auditor and the Respondent did not give the Auditor as part of his scope of work, assessment of penalties and interest under the Unclaimed Financial Assets Act. Thirdly, that the discretion and power to compute, claim, pursue and enforce penalties and interest under sections 33, 47(2) and 50 of the Unclaimed Financial Assets Act, is the preserve of the Authority and cannot be delegated to any party. It was therefore submitted that this assessment of penalties and interest was ultra vires and in excess of jurisdiction and ought to be quashed by this court. The Applicant submitted that it is imputed of the intentions of Parliament that it [Parliament] did not intend to confer power to a body to act in bad faith, or in abuse of the power granted under the enabling statute. The case of R v Commissioner of Racial Equality Ex-parte Hullingdon LBC (1982) QB 276 was relied on.

19. As regarding liability to file returns, the Applicant contended that a plain reading of the provisions of section 20(1) of the Act discloses that there is no legal obligation to file an annual report with the Authority upon an entity/person not holding assets presumed abandoned and subject to the custody of the Authority. Accordingly, it was further submitted that it is clear that the Applicant did not hold any assets subject to the custody of the Respondent. It therefore follows that for the years in question, there was no obligation to file an annual report. The finding by the Respondent and the Auditor that there was an obligation to file an annual return is thus ultra vires the express provision of the Act and cannot stand. Consequently, that the finding on penalties and interest also fails.

20. On illegality and procedural impropriety, firstly, the Applicant posited that in refusing to take into consideration the answers and submissions made by the Applicant, the Respondent had an ulterior motive in ensuring that the liability to settle any Auditors fees under section 31(6) of the UFA Actwould fall on the Applicant and not the Respondent. Secondly, and without prejudice to the above, Applicant averred that as a matter of law, the Respondent under section 31(6) of the Actcan only assess the costs of an examination ‘at such daily rate as the Cabinet Secretary may determine’ and as at the date of the demand letter, the same were yet to issue. Accordingly, in the absence of gazetted daily rates, the provisions of section 31(6) and 31(7) of the Actare therefore inoperable as the Cabinet Secretary is yet to gazette applicable daily rates for examination of records under section 31(3) of Act. That the Respondent therefore had no basis in law to compute and or demand payment of ‘auditor’s fees’ and the demand was therefore an illegality, null and void ab initio.

21. The Applicant also submitted that due process and rules of natural justice demand that a party is given an opportunity to present their position on a given matter; and that such representations are given due consideration before a final decision is made by the decision-making body. It was averred that the Respondent and the Auditor failed, on many occasions, to consider representations made by the Applicant. The Respondent] did not respond in any way to representations made by the Applicant neither did it seek for any clarifications from the Applicant and ultimately came to a wrong decision which assertion is not disputed by the Auditor. Consequently, in the face of this procedural flaw and admission by the Auditor, it was submitted that the decision-making process was therefore procedurally improper.

22. On unreasonableness, the Applicant submitted on section 7(2)(k) and (n) of the Fair Administrative Actions Act. Further, that the Unclaimed Financial Assets Regulations under section 53 of the UFA Act were promulgated in the year 2016. That Regulation 5(1) therefore, explicitly created a mechanism through which the annual report contemplated under section 20(1) of the Act would be filed including relevant forms in the First, Second, Third, Twelfth, and Sixteenth Schedules. However, prior to 2016, there being no regulations in place it thus would be unreasonable to expect any qualifying holder to comply with the section 20(1) as read with section 33(4) and (5) of the Act. Yet the Applicant was penalised for not filing annual reports for the years 2014, 2015 and 2016. Resultantly, the Applicant urged the court to nullify this finding in the Auditor’s Report. Accordingly, it was urged that the application be allowed as prayed.

The Respondent’s Case 23. In opposing the Application, the Respondent filed their Replying Affidavit sworn by Jacob Kipturgo and dated November 25, 2021. The Respondents case was that vide a contract for provision of audit services dated April 18, 2018, the Respondent engaged the firm of PricewaterhouseCoopers Kenya (hereinafter "PwC") pursuant to section 31(5) of Act to conduct an audit of unclaimed financial assets reported/held by Britam Holdings Plc and the its subsidiaries, Britam Life Assurance Company Kenya Limited, Britam General Insurance Company Kenya Limited and Britam Asset Managers Kenya Limited ("hereinafter the Applicants") to confirm compliance with the Act in accordance with Section 31(3)of the Act.

24. Consequent to the foregoing, the Respondent proceeded to inform and notify the Applicant of the said audit. The Applicant co-operated and was well involved in the audit process and was further given a fair opportunity to present all the information through their letter of representation which was duly taken into consideration in preparation of the audit report. This was after review of all the requisite documentation as well as the Applicant’s responses vide its letters together with the management comments. That PwC proceeded to prepare their final report dated April 17, 2019 which indicated that the Applicant is a holder of unclaimed assets and had failed to remit and report to the Authority a total of Kshs 56,484,056. 00 (Kshs 52,215,000. 00 for Life Business, and Kshs 4,269,056. 00 for the Holdings) being unclaimed financial assets, and 21,117,784 units of unclaimed shares that were required pursuant to sections 20, and 22 of the Act, and as per the Unclaimed Financial Assets Regulations, 2016 (hereinafter referred to as “the Regulations”, to be reported to the Authority from the reporting period of November 1, 2014.

25. Based on those findings, the Respondent proceeded to issue a demand letter dated April 26, 2019 demanding for payment of the now disputed unclaimed financial assets amounting to Kshs 56,484,056. 00, the audit fees which amounted to Kshs 3,997,835. 00, and the identified unclaimed shares which amounted 21,117,784 units, within 14 days from the date of receipt of the letter. The Respondent issued to the Applicants the letter dated May 6, 2019 confirming the penalties payable as computed in the audit report by PwC, dated April 17, 2019 pursuant to section 33 of the Act totalling to Kshs 79,790,958/-. It is on the basis of the said letters that the Applicant filed the instant Application.

26. In further opposition to the Application, the Respondent filed its written submissions dated May 30, 2022. On whether the Applicant is a holder of unclaimed financial assets under the Act, counsel for the Applicant contended that it is apparent from the literal reading of section 2, 3, 5, 18 of the Act and the Regulations that Accounts Receivable Credit Balances and claim payments were held by the Applicant and thus the Applicant is classified as a holder of unclaimed assets. That the Respondent was thus well within its statutory mandate in conducting an audit on the Applicant and procedurally issued the demand after the audit conducted in accordance with section 31(4) of the Act. It was Respondent’s further submission that the Applicant’s assertion that section 5 of the Act does not apply to the assets described in the audit report as “account receivable credit balances or memo” is unsupported by law.

27. The Respondent maintained that Section 23 of UFA Act grants it [Respondent] the mandate to assume custody and responsibility for the safekeeping of the unclaimed assets. Pursuant to Sections 3 and 18 of the Act and the Twelfth Schedule of UFAR 2016, the assets held by the Applicants qualify as unclaimed assets thus the Respondent did not act without jurisdiction or in excess of the same.

28. On whether penalties under section 20(1) as read with sections 33 (4) and 33 (5) of the Act are due to the Respondent, it was submitted that the Applicant had knowledge, whether actual or constructive, of its obligations under the Act thereby demonstrating its wilful failure to pay or deliver the assets to the authority. Further, that section 31(7) of the Act imposes the costs of carrying out an examination under section 31 (3) of the Act upon the holder of unclaimed assets. Section 31(7) of the Act provides that “the costs of examination made pursuant to subsection (3) shall be imposed only against the holder.” As such, that the issue of legitimate expectation cannot arise in this instance as there is a clear provision of the statute that provides for the same. Moreover, it is settled law that legitimate expectation cannot override the law.

29. On whether section 52(5) of the Act is unconstitutional, the Respondent posited that section 29 of the Act is a substantive provision that gives the right to challenge a decision or demand of the Respondent. That being the case, section 52 (5) of the Act must be read with section 29 of the Act which guarantees persons the right to challenge the Respondent’s action. It therefore goes without saying that the right to fair administrative action is protected.

30. To that end, the Respondent submitted that it is clear that the Applicant has failed to discharge the burden to prove that section 52 (5) of the Act is unconstitutional. Furthermore, that this Court should find that the order for declaring a law unconstitutional is outside the scope of a judicial review application, and the limited orders that can be sought under section 7(2) and 11 of the Fair Administrative Action Act. It was therefore, urged that the Application is devoid of merit and should be dismissed with costs to the Respondent.

Issues for determination 31. After considering the application, and the materials on record, the following issues for determination arise:i.The Applicable legal principlesii.Whether the subject audit was conducted free of illegality, irrationality or procedural impropriety.iii.Whether the Auditors (agents) appointed by the Respondent had the mandate to compute penalties and interest payable by the Applicant and whether the application of the maximum penalty was unfair.iv.Whether the absence ofUnclaimed Financial Assets Regulations prior to 2016made it impractical to file returns as required under Section 20(1) as read with Section 34(4) and (5) of the Act.v.Whether Section 52(5) of the Unclaimed Financial Assets Act is unconstitutional.vi.What orders should issue

32. It is worth noting at the outset that this court was recently confronted with the issues aforesaid in JR. Appl. No E015 of 2021 Republic v Unclaimed Financial Assets Authority and the Cabinet Secretary, Treasury, The Clerk of the National Assembly, The Hon. Attorney General (interested parties), ex parte AIG Kenya Insurance Company Limited. With benefit of hindsight, and had the substrum of the 2 matters been brought to the attention of the court, these were proper suits for consolidation.

33. On the first issue (i), the Applicant has invoked the judicial review jurisdiction of the court. That jurisdiction, which hitherto a common law remedy, now finds constitutional underpinning in our constitution and specifically at Article 47 thereof which provides;“47. Fair administrative action(1)Every person has the right to administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair.(2)If a right or fundamental freedom of a person has been or is likely to be adversely affected by administrative action, the person has the right to be given written reasons for the action.”

34. Article 47(3) required parliament to legislate to give effect to the rights under Article 47(1). This resulted in the Fair Administrative Action Act (FAAA). Section 7(2) of the FAAA specifies the dos and don’ts by those empowered to take administrative action. The Section provides for grounds of review which include: bias, procedural impropriety, ulterior motive, failure to take into account relevant matters, abuse of discretion, unreasonableness, violation of legitimate expectation or abuse of power. Thus, for the court to review an administrative decision, an Applicant must demonstrate the above grounds. Prove of any single one of them is enough to vitiate the impugned administrative action.

35. Better clarity in the Application of the judicial review remedies in our jurisdiction, post the Constitution of Kenya 2010, is found in the sentiments of the court of Appeal inIndependent Electoral and Boundaries Commission v National Super Alliance Kenya & 6 Others[2017] eKLR where the court stated;“In our considered view presently, judicial review in Kenya has Constitutional underpinning in Articles 22 and 23 as read with Article 47 of the Constitution and as operationalized through the provisions of the Fair Administrative Action Act. The common law judicial review is now embodied and ensconced into constitutional and statutory judicial review. Order 53 of the Civil Procedure Act and Rules is a procedure for applying for remedies under the common law and the Law Reform Act. These common law remedies are now part of the constitutional remedies that the High Court can grant under Article 23 (3) (c) and (f) of the Constitution. The fusion of common law judicial review remedies into the constitutional and statutory review remedies imply that Kenya has one and not two mutually exclusive systems for judicial review. A party is at liberty to choose the common law Order 53 or constitutional and statutory review procedure. It is not fatal to adopt either or both. In the instant case, we have examined the original application filed before the High Court. Whereas the application is stated to be grounded on Order 53 of the Civil Procedure Rules, on the face thereof, Articles 10, 38 (2), 47, 88 and 227 of the Constitution are cited. In our view, this correctly reflects the fusion of constitutional and common law judicial review in Kenya as one system for judicial review.’’

36. In appropriate cases, merit review is permissible in judicial review. The Court of Appeal in Judicial Service Commission & another v Njora (Civil Appeal 486 of 2019) [2021] KECA 366 (KLR) (7 May 2021) stated:“In our own jurisdiction, judicial review has taken the same trajectory in recent years, spurred in large measure by the Constitution of Kenya, 2010. It changed the fundamental underpinnings of judicial review from the common law as codified in the Law Reform Act, to its Article 22(3) (f), which recognizes judicial review as one of the appropriate reliefs available. This is bolstered by Article 47(1), which decrees the right to fair administrative action, given further effect by the Fair Administrative Action Act which, at Section 7(2), sets out an expansive list of circumstances in which a court may review an administrative action or decision.The superior courts of this country have spoken with near-unanimity that the current constitutional and statutory landscape calls for a more robust application of the relief of judicial review to include, in appropriate cases, a merit review of the impugned decision. See, for instance, Communication Commission of Kenya v Royal Media Services & 5 Others [2014] eKLR by the Supreme Court, this Court’s decisions in Suchan Investment Ltd v Ministry Of Natural Heritage & Culture & 3 Others [2016]eKLR and Child Welfare Society Of Kenya various Republic & 2 Others Ex parte Child In Family Focus Kenya[2017]eKLR and the High Court’s. in Republic v Commissioner Of Customs Services Ex parte Imperial Bank Ltd[2015] eKLR (per Odunga, J.) They all speak to the unmistakable sea change and approach, ……’’

37. Therefore, developing jurisprudence in our country shows that merit review is permissible in the new constitutional dispensation. However, such development in the law cannot be stretched to the extent of allowing the judicial review court to substitute the decision of the subject body with its own. Case in point being that in the instances of the performance of a public duty, in a technical sphere like in the present suit, the court cannot substitute the decision of the auditor, but can review the process and the audit review on the merits restricted to: whether the action taken was authorized by law, whether the affected parties were heard, whether the decision maker considered irrelevant matters or failed to consider relevant matters, whether there was bias, and generally whether the principles of natural justice were complied with. These considerations would inform the propriety or otherwise of the impugned audit report. Such merit review would include , in the words of the Court of Appeal in Suchan Investment Ltd v Ministry Of Natural Heritage & Culture & 3 Others [2016]Eklr the following;“Analysis of Article 47 of the Constitution as read with the Fair Administrative Action Act reveals the implicit shift of judicial review to include aspects of merit review of administrative action. Section 7 (2) (f) of the Act identifies one of the grounds for review to be a determination if relevant considerations were not taken into account in making the administrative decision; Section 7 (2) (j) identifies abuse of discretion as a ground for review while Section 7 (2) (k) stipulates that an administrative action can be reviewed if the impugned decision is unreasonable. Section 7 (2) (k) subsumes the dicta and principles in the case of Associated Provincial Picture Houses Ltd v Wednesbury Corp. [1948] 1 KB 223 on reasonableness as a ground for judicial review. Section 7 (2) (i) (i) and (iv) deals with rationality of the decision as a ground for review. In our view, whether relevant considerations were taken into account in making the impugned decision invites aspects of merit review. The grounds for review in Section 7 (2) (i) that require consideration if the administrative action was authorized by the empowering provision or not connected with the purpose for which it was take and the evaluation of the reasons given for the decision implicitly require assessment of facts and to that extent merits of the decision. It must be noted that the even if the merits of the decision is undertaken pursuant to the grounds in Section 7(2) of the Act, the reviewing court has no mandate to substitute its own decision for that of the administrator. The court can only remit the matter to the administrator and or make orders stipulated in Section 11 of the Act…….’’

38. The expanded scope of judicial review must, in my view, be restrained so as not to wander beyond the court’s legitimate power to review administrative actions of bodies mandated in law to take such actions or decisions. Any exercise of the supervisory jurisdiction that tends to usurp the powers of administrative bodies would find no legal backing and must therefore be eschewed. Where a power is donated by statute, the court’s only legitimate power is to supervise under judicial review the proper exercise of such power. Ngaah J in HCJR Case No E087 of 2021, AAR Insurance v Public Procurement Administrative Review Board, Secretary IEBC anad Zamara Risk and Insurance brokers Limited Interested Parties (unreported), stated;“One thing I am inclined to say is, as much as the Fair Administrative Action Act has widened the scope of judicial review reliefs, it must always be remembered that the administrative process is not, and cannot be, a succession of justiciable controversies. Public authorities are set up to govern and administer, and if their every act and decision were to be reviewed on unrestricted grounds by an independent judicial body, the business of administration could be brought to a standstill. The prospect of judicial relief cannot be held out to every personwhose interests maybe affected by administrative action. (See De Smith, Wolf and Jowell, Judicial Review of Administrative Action, at page 3. )

39. On the issue No (ii), the necessary ingredients to consider are whether the Respondent through its agent had the jurisdiction to conduct the audit, acted within the law, reached a rational decision and in the process of making the decision acted fairly. The explanation in the Uganda case of Pastoli v Kabale District Local Government Council and Others [2008] 2 EA 300, while citing Council of Civil Unions v Minister for the Civil Service[1985] AC 2, and an Application by Bukoba Gymkhana Club [1963] EA 478 at 479, captures what is expected of the Respondent as a body taking an administrative action that affected the Applicant. The Court held;“In order to succeed in an application for judicial review, the applicant has to show that the decision or act complained of is tainted with illegality, irrationality and procedural impropriety ...Illegality is when the decision-making authority commits an error of law in the process of taking or making the act, the subject of the complaint. Acting without jurisdiction or ultra vires, or contrary to the provisions of a law or its principles are instances of illegality. It is, for example, illegality, where a Chief Administrative Officer of a District interdicts a public servant on the direction of the District Executive Committee, when the powers to do so are vested by law in the District Service Commission...Irrationality is when there is such gross unreasonableness in the decision taken or act done, that no reasonable authority, addressing itself to the facts and the law before it, would have made such a decision. Such a decision is usually in defiance of logic and acceptable moral standards...Procedural Impropriety is when there is a failure to act fairly on the part of the decision-making authority in the process of taking a decision. The unfairness may be in non-observance of the Rules of Natural Justice or to act with procedural fairness towards one to be affected by the decision. It may also involve failure to adhere and observe procedural rules expressly laid down in a statute or legislative Instrument by which such authority exercises jurisdiction to make a decision.”

40. In the instant case, the Respondent engaged the firm of PwC pursuant to Section 31(5) of the Act to conduct Audit of unclaimed assets which audit included the Applicant and its subsidiaries to confirm compliance with Section 31(3) of the Act. A notice of the impending exercise was duly issued to the Applicant. A plain reading of these provisions clearly shows that the Respondent was within its statutory mandate in conducting the audit. I set out Section 31(3) (4) and (5):“3)The Authority shall have powers to, at reasonable times and upon reasonable notice, examine the records of a person to determine whether the person has complied with this Act.4)The Authority shall have powers to conduct the examination referred to in sub section (3) whether or not the person believes he or she is not in possession of any assets reportable or deliverable under this Act.5)The Authority shall have power to enter into a contract with any other person to conduct examination under this section on behalf of the Authority.”

41. Regarding the actual audit conduct, the record shows a smooth entry of the auditor, the cooperation of the applicant in the audit and the provision of required access and documentation. Nancy Kiruki confirms in her affidavit that there was some level of engagement with PWC preparing a total of 3 draft reports and further engagement led to the generation of 3 draft reports dated August 6, 2018,October 29, 2018 and October 31, 2018. It is at the exit meeting that the applicant raised some concerns regarding various aspects of the draft reports which concerns were documented in a letter dated November 8, 2018. According to the applicant these concerns were ignored and a final report dated April 17, 2019 issued and the Respondent issued a demand letter dated April 26, 2019.

42. It was the Applicant’s case, as gleaned from the affidavits of Nancy Kiruki and Jackson Kiboi that all the information regarding the matured life policies, cheques drafts and similar instruments, death claims, surrendered life policies, unclaimed dividends, and unreported shares was made available to PwC during the various meetings they had at the time of the audit. Similarly, that the information was made available to the Respondent prior to issuance of the Demand Letters. The Applicants maintained that notwithstanding the Respondent being aware of this information, both PwC and the Respondent elected to ignore the information provided. consequently, PwC and the Respondent failed to consider relevant materials in coming to the conclusions that they [PWC and Respondent] did in their audit report and the Demand Letters.

43. Further, the Applicants case was that upon having an exit meeting with PwC and the Respondent on November 15, 2018, the ex-parte Applicant issued a letter dated the November 8, 2018, addressing issues of concern which it requested the Respondent and PwC to take into account and/correct prior to taking any further action with respect to the examination process. That without responding to that letter, the Respondent proceeded to issue the demand letter dated the April 26, 2019 and completely ignored the representations of the 1st ex parte Applicant as contained in the letter of the November 8, 2018. That having belatedly noticed this act of bad faith and malice, the Respondent issued a letter dated the May 6, 2019 after it issued the demand letter purporting to respond to the 1 ex-parte Applicant's letter of the 8th of November 2018; and dismissing all assertions made by 1 ex-parte Applicant. That this action demonstrates complete procedural unfairness, abuse of power, and unfair administrative action whose outcome is pre­determined.

44. On their part, the Respondent, as captured in the Replying Affidavit of Jacob Kipturgo, presented their case that the Applicants were well involved in the process, including attendance at the preliminary, and exit meetings, as well as providing management comments; which were taken into consideration in preparation of the final audit report. Also, the Respondent conceded that the Applicants co-operated during the process and provided the necessary support, documentation, and information. Further, that the Applicant was given a fair opportunity to present all the information through their letter of representation which was duly taken into account in preparation of the audit report.

45. The Respondent in their submission have expended considerable energy positing why and how the audit report was correct. However, correct the audit report could be, the process through which it was reached must of necessity abide by the tenets of natural justice. In the case of Onyango Oloo v Attorney General it was held that“A decision in breach of the rules of natural justice is not cured by holding that the decision would otherwise have been right if the principle of natural justice is violated, it matters not that the same decision would have been arrived at “

46. Ignoring the representations by the Applicant is in complete derogation of the Applicant’s right to fair administrative action, a right ring fenced in no lesser than the Constitution itself under Article 47 and as operationalized in the FAAA. The failure to put into account the Applicant’s representations means that the Respondent’s agent failed to consider relevant matters. The process and the impugned audit report fail the test of procedural propriety. The same offends the provisions of Section 7(2)(c), (f), and (n) of the FAAA in respect of procedural unfairness, failure to take into account relevant considerations and unfairness.

47. The court in Msagha v Chief Justice & 7 OthersNairobi HCMCA No 1062 of 2004 [2006] KLR set out the ingredients of fairness and natural justice. It was held;“The ingredients of fairness or natural justice that must guide all administrative decisions are, firstly, that a person must be allowed adequate opportunity to present their case where certain interests and rights may be adversely affected by a decision maker; secondly, that no one ought to be a judge in his or her case and this is the requirement that the deciding authority must be unbiased when according the hearing or making the decision; and thirdly, an administrative action must be based upon logical proof or evidence material.”And as held in Ex Parte Preston [1985] A.C. 835,“I must make it clear in my view that the principle of fairness has an important place in the law of judicial review.; and that in an appropriate case, it is a ground upon which the court can intervene to quash a decision made by a public officer or authority in purported exercise of powers conferred by law”.

48. To that end, it is manifestly clear that the process and the audit report arrived at by the agent of the Respondent does not meet the legal muster of an administrative action that afforded the Applicant the right to fair administrative action envisaged under Article 47 and in the FAAA. The audit report and the consequential letters of demand dated April 26, 2019 and May 6, 2019 ought to be brought before this court to be quashed.

49. Of importance, the quashing must not be interpreted to mean that the Applicant should not be audited as per the law provided. The Respondent retains the statutory powers to initiate such an audit provided the same affords the Applicant latitude in the manner specified hereinabove.

50. This suit was predicated on the now successfully impugned audit report. The said report has fallen by the wayside to the extent that it has been found to suffer procedural impropriety. All the contents of the audit report and anything done on the strength of the report is a nullity. In those circumstances, I do not find it necessary to delve into the other issues flagged for determination, save the question of constitutionality of Section 52(5) of the Act, and the issue of costs.

51. Before I venture into the endeavour, I need to express my view on the unbridled tendency by parties to combine claims that ought to go directly to the Constitutional Division of this Court, with the claims that are strictly speaking for judicial review jurisdiction of this court. The expanded space by the Constitution, if not well checked and managed as well be a key to anarchy, confusion, and uncertainty in the court’s operations. Despite the apparent fusion of the jurisdictions majorly because of the enforcement of the constitutional ethos that cut across all our courts, the specific jurisdictions remain distinct and must be observed for good order and predictability in the court processes. Our work as courts is cut out and the need to delineate the extents of merit review is urgent. What springs to mind is the words of the court of Appeal in where it stated;“Analysis of Article 47 of the Constitution as read with the Fair Administrative Action Act reveals the implicit shift of judicial review to include aspects of merit review of administrative action. Section 7 (2) (f) of the Act identifies one of the grounds for review to be a determination if relevant considerations were not taken into account in making the administrative decision; Section 7 (2) (j) identifies abuse of discretion as a ground for review while Section 7 (2) (k) stipulates that an administrative action can be reviewed if the impugned decision is unreasonable. Section 7 (2) (k) subsumes the dicta and principles in the case of Associated Provincial Picture Houses Ltd v Wednesbury Corp. [1948] 1 KB 223on reasonableness as a ground for judicial review. Section 7 (2) (i) (i) and (iv) deals with rationality of the decision as a ground for review. In our view, whether relevant considerations were taken into account in making the impugned decision invites aspects of merit review. The grounds for review in Section 7 (2) (i) that require consideration if the administrative action was authorized by the empowering provision or not connected with the purpose for which it was take and the evaluation of the reasons given for the decision implicitly require assessment of facts and to that extent merits of the decision. It must be noted that the even if the merits of the decision is undertaken pursuant to the grounds in Section 7 (2) of the Act, the reviewing court has no mandate to substitute its own decision for that of the administrator. The court can only remit the matter to the administrator and or make orders stipulated in Section 11 of the Act. On a case by case basis, future judicial decisions shall delineate the extent of merit review under the provisions of the Fair Administrative Action Act.

52. It is contended by the Applicant, that Section 52(5) makes it clear that it is an offence to fail to meet a demand by the Authority, whether to pay funds or deliver assets. It is urged that the provision removes the constitutional presumption of innocence under Article 50(2) of the Constitution, and does not allow a person to challenge a demand by the Authority. That the Section is thus ultra vires the Constitution and should be declared unconstitutional, null and void to the extent of the unconstitutionality. That contention is opposed by the Respondent.

53. The Section 52(5) of the Act provides; - “A person who wilfully refuses after written demand by the Authority to pay or deliver assets to the Authority as required under this Act commits an offence.’’

54. As held in the case of Council of County Governors v Inspector General of the National Police Service & 3Others[2015] eKLR all Acts of Parliament are presumed to be constitutional unless proven by the party alleging otherwise.

55. My reading of Section 52(5) clearly shows that the Section establishes the offence and its ingredients, but does not in any way preclude a party from enjoying the presumption of innocence or mounting a defence. The establishment of an offence in the law does not make such a law unconstitutional. Were that to be the case, Penal Codes all over the world would have been declared unconstitutional a long time ago. It was incumbent on the Applicant to prove the unconstitutionality of the section. Other than stating that the section does not allow a person to challenge the demand by the Authority, nothing more is proffered. In Kenya Human Rights Commission v Attorney General & another [2018] eKLR the court stated;“There is a general but rebuttable presumption that a statute or statutory provision is constitutional and the burden is on the person alleging unconstitutionality to prove that the statute or its provision is constitutionally invalid. This is because it is assumed that the legislature as peoples’ representative understands the problems people they represent face and, therefore enact legislations intended to solve those problems. In Ndynabo v Attorney General of Tanzania [2001] EA 495 it was held that an Act of Parliament is constitutional, and that the burden is on the person who contends otherwise to prove the country. 48. Another key principle of determining constitutional validity of a statute is by examining its purpose or effect. The purpose of enacting a legislation or the effect of implementing the legislation so enacted may lead to nullification of the statute or its provision if found to be inconsistent with the constitution. In Olum and another v Attorney General [2002] EA, it stated that;

“To determine the constitutionality of a section of a statute or Act of parliament, the Court has to consider the purpose and effect of the impugned statute or section thereof. If its purpose does not infringe a right guaranteed by the Constitution, the Court has to go further and examine the effect of the implementation. If either its purpose or the effect of its implementation infringes a right guaranteed by the Constitution, the impugned statute or section thereof shall be declared unconstitutional.”

56. The Court’s duty in interpreting a statute is to give effect to the intention of the legislature, the objects and purpose being the key drivers - all the while alive to the need of the statute to conform with the constitution. I take the view that the object and purpose of section 52(5) is to ensure compliance with the demands by the Authority, by establishing non-compliance as an offence. This would go a long way in facilitating the execution of the Authorities mandate. It is worth noting that the section does not provide for a penalty to be meted out without a party being heard. I am satisfied that the section is constitutional.

57. With the result that the notice of motion is successful to the extent indicated hereinabove. I make the following orders;1. An order of Certiorari is hereby issued to quash the demand letters: the first letter dated April 26, 2019 demanding the payment of Kshs 56,484,056. 00 being unclaimed assets and Kshs 3,997,835. 00 being audit fees, and to report the identified unclaimed shares totalling 21,117,784 units; and the second letter dated May 6, 2019 confirming the penalties payable as computed in the audit report by PwC - dated the April 17, 2019 – as Kshs 79,790,958. 00. 2.An order of Certiorari is hereby issued to quash the findings of the audit report prepared and published by PWC dated April 17, 2019, in so far as it returned a finding that (1) the ex-parte Applicant was holding identified unclaimed assets under section 5 of the Unclaimed Financial Assets Act whose value totalled Kshs 56,484,056. 00 and to report the identified unclaimed shares totalling 21,117,784 units, (2) penalties and interest payable by the ex-parte Applicant under the provisions of sections 33 of the Unclaimed Financial Assets Act was a sum of Kshs 79,790,958. 00. 3.An order of Prohibition is hereby directed at the Respondent prohibiting and restraining the Respondent whether acting directly or through any of their agents, employees and/or officers from issuing, executing, enforcing and/or implementing any or any further decisions, demands or notices as against the Ex-Parte Applicant based on thePwC Audit Report - dated April 17, 2019. 4.A Declaration that the provisions of section 52(5) of the Unclaimed Financial Assets Act are not unconstitutional.5. Since this determination has not been arrived at based on the merits of whether the Applicant was holding unclaimed Asset, but on the basis of the flawed process, I direct that each party bears its own costs.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 8TH DECEMBER 2022A. K. NDUNGUJUDGE