[2023] KEHC 24166 (KLR)

Wanjohi & another v Attorney General & 4 others (Petition E044 of 2022) [2023] KEHC 24166 (KLR) (23 October 2023) (Ruling)

Neutral citation: [2023] KEHC 24166 (KLR)

Republic of Kenya

In the High Court at Mombasa

Petition E044 of 2022

OA Sewe, J

October 23, 2023

IN THE MATTER OF THREATENED CONTRAVENTION OF ARTICLES 1, 2, 3, 6, 10, 19, 20, 21, 23, 24, 27, 28, 33, 35, 36, 43, 46, 47, 48 AND 118 OF THE CONSTITUTION OF KENYA, 2010 AND IN THE MATTER OF THE TAX PROCEDURES ACT, NO. 29 OF 2015 AND IN THE MATTER OF RULES 23 AND 24 OF THE CONSTITUTION OF KENYA (PROTECTION OF RIGHTS AND FUNDAMENTAL FREEDOMS) PRACTICE AND PROCEDURE RULES, 2013 AND IN THE MATTER OF LEGAL NOTICE NO. 112 OF 2020, TAX PROCEDURES (UNASSEMBLED MOTOR CYCLES) REGULATIONS, 2020 AND IN THE MATTER OF LEGAL NOTICE NO. 192 OF 2021, TAX PROCEDURES (UNASSEMBLED MOTOR CYCLES) AMENDMENT REGULATIONS, 2021 AND IN THE MATTER OF LEGAL NOTICE NO. 223 OF 2021, THE TAX PROCEDURES (UNASSEMBLED MOTOR CYCLES) (AMENDMENT NO. 2) REGULATIONS, 2021 BETWEEN

Between

William Wachiuri Wanjohi

1st Petitioner

John Macharia

2nd Petitioner

and

Attorney General

1st Respondent

Speaker of The National Assembly

2nd Respondent

Ministry of Treasury And Planning

3rd Respondent

Ministry of Industrialization, Trade and Enterprise Development

4th Respondent

Kenya Revenue Authority

5th Respondent

Ruling

(1)The Notice of Motion dated 19th September 2022 was filed herein by the two petitioners alongside their Petition of even date. They approached the Court pursuant to the provisions of Articles 22, 23, 24, 159, 165(3)(d), 258, and 259 of the Constitution of Kenya, 2010, as well as Rules 19, 23 and 24 of the Constitution of Kenya (Protection of Rights and Fundamental Freedoms) Practice and Procedure Rules, 2013, for various orders, some of which are now spent. The outstanding prayers are:(a)That the Court be pleased to issue conservatory orders suspending the operationalization of the Tax Procedures (Unassembled Motorcycles) Regulations, 2020 pending the hearing and determination of the Petition.(b)That the Court be pleased to issue conservatory orders barring the respondents herein from implementing and or acting on the Tax Procedures (Unassembled Motorcycles) Regulations, 2020 pending the hearing and determination of the Petition.(c)That the costs of the application be provided for.

(2)The application was premised on the grounds set out on the face thereof and in the Supporting Affidavit sworn on 19th September 2022 by the 1st petitioner, William Wachiuri Wanjohi. Thus, the petitioners averred that, on the 17th June 2020, the Cabinet Secretary for the National Treasury and Planning signed the Tax Procedures (Unassembled Motorcycles) Regulations, 2020 which sought to introduce a raft of measures to regulate the motorcycle assembly value chain. The petitioners further averred that, thereafter, on the 17th September 2021 and 29th October 2021, respectively, the Cabinet Secretary for National Treasury and Planning signed the Legal Notice No. 192 and 223 Tax Procedures (Unassembled Motorcycles) Regulations, 2021 which sought to amend the Tax Procedures (Unassembled Motorcycles) Regulations, 2020 (hereinafter, “the 2020 Regulations”) without subjecting the proposed amendments to public participation as required by Articles 10, 118, 124, 201 and 232 of the Constitution.

(3)They further complained that the 2020 Regulations have crippled their businesses in the motorcycle assembly and manufacture value chain due to their restrictive and discriminatory nature, to such an extent that they have become unbearable to the Micro, Small & Medium Enterprises. At paragraphs 10 to 22, Mr. Wanjohi stated the manner in which his business of selling motorcycles has been adversely affected since the 2020 Regulations came into effect; pointing out that, the cost of a motorcycle has since gone up from an average of Kshs. 70,000/= to Kshs. 130,000/= as of 2022. He added that whereas he used to sell more than 30 motorcycles in a month, as at the time of filing this Petition he could hardly sell 5 motorcycles in a month.

(4)The 1st petitioner also deposed that the implementation of the 2020 Regulations has led to massive loss of employment in the motorcycle assembly sector due to closure of several small local assembly plants. He added that some unassembled motorcycle parts have been detained at the Container Freight Stations where they continue to attract demurrage for lack of the requisite clearance certificates. He therefore averred that it is in the interest of justice for the orders sought to be granted pending the hearing and determination of the Petition to enable the petitioners and thousands of Kenyans continue doing business unhindered.

(5)The application was resisted by the respondents. Hence, counsel for the 2nd respondent, Mr. Mwendwa, filed Grounds of Opposition dated 23rd September 2023, contending, in the main, that:(a)The petitioners’ prayers in the Notice of Motion dated 19th September 2022 threaten the legislative role of the National Assembly as provided for in Articles 1(1), 94, 95 and 109 of the Constitution.(b)There was adequate public participation in the process of enactment of the 2020 Regulations.(c)There is the general presumption of constitutionality of legislation.

(6)In addition, the 2nd respondent filed a Replying Affidavit on 15th February 2023, sworn by the Deputy Clerk of the National Assembly, Mr. Jeremiah Ndombi, MBS. He made reference to the mandate of the 2nd respondent from the standpoint of Articles 94 of the Constitution, Section 11 of the Statutory Instruments Act, No. 23 of 2013 and Standing Order 210 of the National Assembly Standing Orders. On that score, Mr. Ndombi averred that the Tax Procedures (Unassembled Motorcycles) Regulations 2020}}, the Tax Procedures (Unassembled Motorcycle) (Amendment) Regulations, 2021 and the Tax Procedures (Unassembled Motorcycle) (Amendment) (No. 2) Regulations, 2021, were processed in the National Assembly in accordance with the requirements of the Statutory Instruments Act and the National Assembly Standing Orders. To buttress his averments, Mr. Ndombi annexed the pertinent documents to his affidavit, including a copy of the Hansard for Wednesday 5th August 2020 as well as Minutes of the Committee on Delegated Legislation, for consideration by the Court.

(7)In response to the application, the 3rd respondent, the Ministry of Treasury and Planning, relied on the affidavit sworn on 14th October 2022 by the Principal Administrative Secretary of the 3rd respondent, Mr. Amos Njoroge Gathecha. He averred that the 2020 Regulations were developed as a result of the need to provide a legal framework to guide the assembly of motorcycles locally, taking into account the need to integrate the assembly of motorcycles with local parts manufacturing. He explained, at paragraphs 4 to 6 of his affidavit, the process employed in the formulation of the impugned Regulations and exhibited documents in proof of compliance with the applicable standards.

(8)Mr. Gathecha also pointed out that the 2020 Regulations have been in operation since June 2020; and that so far, 17 approved assemblers have complied with the requirements and are currently benefitting from the Duty Remission Scheme provided for thereunder. He consequently denied the assertions by the petitioners that the development and operationalization of the 2020 Regulations have been marred with secrecy; or that the Regulations are frequently varied without public participation. He averred, to the contrary, that the Regulations were varied only twice and that the variations were intended to benefit both the assemblers and part manufacturers. Thus, Mr. Gathecha prayed for the dismissal of the application dated 19th September 2022 with costs.

(9)On behalf of the 5th respondent, Mr. Kinyua filed the following Grounds of Opposition on 26th September 2022:(a)The impugned Regulations enjoy a presumption of constitutionality, with the burden of proving otherwise resting on the applicant;(b)The instant Petition is an afterthought noting that the impugned Regulations were enacted more than two years ago on 17th June 2020. (c)The applicant has not demonstrated how the operationalization of the 2020 Regulations poses a danger to life and limb to warrant the grant of the conservatory orders sought.(d)The Petition is pre-emptive and in bad faith noting that the petitioners have not complied with Regulation 4(2) of the impugned Regulations.(e)The application is frivolous, vexatious and a gross abuse of the court process; and has been lodged solely for the purpose of avoiding the necessity of applying in the normal way for appropriate judicial remedy for the alleged unlawful administrative action, which involves no contravention of any human right or fundamental freedom.(f)The impugned Regulations are as a result of policy statement to support local manufacturing, one of the pillars in the Big Four Agenda.

(10)In addition to its Grounds of Opposition, the 5th respondent relied on the Replying Affidavit of Josephine Mugure, sworn on 18th November 2022. The affiant traced the history of the impugned Regulations to March 2019 when the Government of Kenya constituted a taskforce to oversee policy, legal and administrative reforms in the boda boda sector. At paragraphs 11 to 20 of her affidavit, Ms. Mugure averred that the impugned Regulations were subjected to public participation in accordance with Article 10 of the Constitution; and that the positive effects of the operationalization of the Regulations have been evident since the year 2020 in terms of orderly expansion of the sector and the popularity of boda bodas as a means of transport.

(11)Thus, Ms. Mugure averred that the petitioners have not established a prima facie case with a likelihood of success; and that all they have done is make unintelligible assertions concerning the Regulations. She further asserted that the petitioners have failed to demonstrate how the substratum of the Petition will be rendered nugatory if the orders sought are not granted; or how the implementation of the Regulations will prejudice them. She therefore prayed for the dismissal of the application dated 19th September 2022 with costs.

(12)The petitioners filed a response to the 3rd respondent’s Replying Affidavit as well as the Grounds of Opposition filed by the 2nd and 5th respondents. He asserted that the Notice of Motion dated 19th September 2022 clearly demonstrates the damage caused by the impugned Regulations to the motorcycle assemblers, riders, thousands of employees in the industry, businesses and the general public. He further averred that the right to petition the Court on an infringement of rights and for enforcement of rights under the Bill of Rights is not subject to the doctrine of laches.

(13)The 1st petitioner further blamed the impugned Regulations for the decline in revenue collection by the 5th respondent; and expressed surprise that the 5th respondent is opposed to their application. He denied the assertion that the locally assembled motorcycles are cheaper due to the tax incentive of 10% duty remission. He reiterated that, overall, the impugned Regulations have had the effect of constricting operations as well as growth in the subject sector.

(14)The application was canvassed by way of written submissions, pursuant to the directions given herein on 4th November 2022. Mr. Gwandaru, learned counsel for the petitioners, filed his written submissions on 27th January 2023 and thereby proposed the following issues for determination:(a)Whether the petitioners’ application has met the elements for granting injunctive orders sought and subsequent suspension of the Tax Procedure (Unassembled Motorcycles) Regulations pending the hearing and determination of the Petition;(b)Whether the respondents will suffer any prejudice if the Court grants the applicants the orders sought;(c)Whether it is in the public interest that the application be allowed and orders granted as sought.

(15)Counsel then proceeded to submit on the issues as proposed and relied on Giella v Cassman Brown, Mrao Ltd v First American Bank of Kenya, Nguruman Limited v Jan Bonde Nielsen & 2 Others; Khelef Khalifa & 2 Others v Independent Electoral and Boundaries Commission & Another [2017] eKLR and Robert N. Gakuru & Others v Governor, Kiambu County & 3 Others [2014] eKLR to underscore his submission that the petitioners have demonstrated a prima facie case with a probability of success; and that no meaningful public participation was undertaken prior to the formulation and operationalization of the impugned Regulations. He added that no prejudice will be suffered by the respondents if the instant application is allowed; and that, to the contrary, it is in the public interest that the orders sought be granted.

(16)On behalf of the 1st, 3rd and 4th respondents, Ms. Kiti relied on the affidavit of Mr. Gachetha and her written submissions dated 7th February 2023. She proposed the following issues for consideration:(a)Whether there was public participation in the enactment of the Tax Procedures (Unassembled Motorcycles) Regulations, 2020;(b)Whether the impugned Regulations are discriminatory;(c)Whether the impugned Regulations contravene consumer rights of Kenyans; and whether the matter is justiciable.

(17)Counsel then made submissions to demonstrate that sector specific consultations were carried out and feedback sought from the public on the Regulations. She relied on Nairobi Metropolitan PSV Saccos Union Limited & 25 Others v County Government of Nairobi & 3 Others [2013] eKLR and Petition No. 5 of 2017: British American Tobacco Kenya Limited v Cabinet Secretary for the Ministry of Health for the proposition that what matters is that at the end of the day a reasonable opportunity is offered to members of the public and all interested parties to know about the issue and to have an adequate say.

(18)Counsel similarly urged the Court to find that the impugned provisions of the Regulations were deliberately included to serve a legitimate policy goal to ensure growth in local manufacturing, job creation and to prevent abuse of the window for importation of the importation of parts under the Duty Remission Scheme. On whether the impugned Regulations contravene consumer rights, counsel urged the Court to focus, not to the personal interests of the petitioners, but to the overall economic benefits that are envisaged by the Regulations in line with Kenya’s Vision 2030 and the Big Four Agenda.

(19)Similarly, Mr. Mwendwa for the 2nd respondent placed reliance on his written submissions dated 30th January 2023. He made reference to Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 Others [2014] eKLR to support his submission that the petitioners’ application falls short of the test set out by the Supreme Court for the grant of conservatory orders, namely: the public interest, the constitutional values, the proportionate magnitudes and the priority levels attributable to the relevant cause. In his view, the petitioners have not disclosed how the Constitution is violated by the impugned Regulations; and therefore that no prima facie case has been made out to warrant the issuance of the orders sought.

(20)It was further the submission of Mr. Mwendwa that the orders sought by the petitioners, being final in nature, cannot be granted at an interim stage. He was of the view that, if conservatory orders were to be granted as proposed, the effect would be to determine the Petition without giving the parties a hearing. He relied on Muslim for Human Rights (Milimani) & Others v Attorney General & 2 Others [2011] eKLR and Kenya Association of Manufacturers & Others v Cabinet Secretary, Ministry of Environment and Natural Resources & 3 Others [2017] eKLR for the proposition that at this stage, the Court is not invited to make any definite or conclusive findings of fact or law on the dispute before it.

(21)On his part, Mr. Kinyua, learned counsel for the 5th respondent, relied on his written submissions filed on 15th February 2023. He proposed a single issue for consideration, namely, whether the petitioners have satisfied the threshold for grant of conservatory orders to restrain the 5th respondent from implementing and/or enforcing the Tax Procedures (Unassembled Motorcycles) Regulations, 2020. He premised his submissions on Article 23(3)(c) of the Constitution, Rule 23 of the Constitution of Kenya (Protection of Rights and Fundamental Freedoms) Practice and Procedure Rules, as well as the Board of Management of Uhuru Secondary School v City County Director of Education & 2 Others [2015] eKLR and Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 Others (supra) and urged the Court to decline the invitation by the petitioners to suspend the impugned Regulations.

(22)Counsel further submitted that it is a serious step to suspend the operation of a statute; and that the petitioners were under obligation to prove that the operation of the impugned provisions poses a danger to life and limb of Kenyans. In this regard, counsel relied on Mombasa High Court Petition No. 669 of 2009: Bishop Joseph Kimani & Others v Attorney General for the proposition that, except where the national interests demand so and the situation is certain, conservatory orders to suspend operation of statutes and regulations should be wholly avoided. He also commented on whether a prima facie case has been made out by the petitioners from the standpoint of the standard set in Mrao Ltd v First American Bank of Kenya Ltd (supra) and Kevin K. Mwiti & Others v Kenya School of Law & Others (supra). In his view, the petitioners have neither shown how the enactment of the 2020 Regulations has violated or infringed on their fundamental rights, nor the prejudice they stand to suffer if the orders sought are declined. He consequently prayed for the dismissal of the petitioners’ application with costs.

(23)I have given careful consideration to the application, and in particular, the grounds relied on by the petitioners as explicated on the face of the application and in the two affidavits filed in support of the application. I have likewise considered the response filed on behalf of the respondents as well as the averments set out in the affidavits sworn on their behalf by Amos Njoroge Gathecha, Jeremiah Ndombi and Josephine Mugure. As correctly pointed out by counsel in their submissions, at this stage, the Court need not examine the merits of the case closely. Indeed, in Muslim for Human Rights & 2 Others v Attorney General & 2 Others (supra) it was held:“The court must be careful for it not to reach final conclusion and to make final findings. By the time the application is decided; all the parties must still have the ability and flexibility to prosecute their cases or present their defences without prejudice. There must be no conclusivity or finality arising that will or may operate adversely vis-à-vis the case of either party. The principle is similar to that in temporary or interlocutory injunctions in civil matters…”

(24)Similarly, in Nairobi High Court Petition No. 16 of 2011: Centre for Rights Education & Awareness (CREAW) & 7 Others v Attorney General, it was held:“At this stage, a party seeking a conservatory order only requires to demonstrate that he has a prima facie case with likelihood of success and that unless the court grants the conservatory order, there is real danger that he will suffer prejudice as a result of the violation or threatened violation of the Constitution.”

(25)Hence, I have chosen to ignore substantial parts of the submissions made by learned counsel which are geared towards urging their respective positions vis-à-vis the Petition as opposed to the application for conservatory orders. For instance, counsel for the 1st, 3rd and 4th respondents submitted largely on whether there was public participation in connection with the impugned Regulations; whether they are discriminative and whether the grounds set out in the Petition are justiciable. A similar approach was taken by Mr. Mwenda for the 2nd respondent. In addition, reference was made generally to the presumption of constitutionality in connection with legislation and the regulations made thereunder. These are all issues that are germane to the Petition and therefore require no consideration at this interlocutory stage.

(26)I therefore agree entirely with counsel for the 5th respondent that the single issue for determination is whether the petitioners’ have made out a case for the grant of conservatory orders pending the hearing and determination of the Petition. It is therefore apposite to restate the expressions of the Supreme Court in Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 Others (supra) that:“Conservatory orders bear a more decided public-law connotation; for these are orders to facilitate ordered functioning within the public agencies, as well as to uphold the adjudicatory authority of the Court, in the public interest. Conservatory orders, therefore, are not, unlike interlocutory injunctions, linked to such private party issues as “the prospects of irreparable harm” occurring during the pendency of a case or “high probability of success” in the Applicant’s case for order of stay. Conservatory orders, consequently, should be granted on the inherent merit of a case, bearing in mind the public interest, the constitutional values and the proportionate magnitudes, and priority levels attributable to the relevant cases.”

(27)Hence, it is now settled that an applicant for conservatory orders for purposes of Articles 22 and 23(3)(c) of the Constitution must satisfy the Court as to the following three elements:(a)A prima facie case with a high likelihood of success;(b)That the petitioner stands to suffer prejudice unless the orders sought are granted;(c)That public interest weighs in the applicant’s favour.

(28)What amounts to a prima facie case was aptly stated in Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] KLR 123 thus:“A prima facie case in a civil application includes but not confined to a genuine and arguable case. It is a case in which on the material presented to the Court a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter."

(29)Similarly, in Kevin K Mwiti & others v Kenya School of Law & others (supra), it was held that:“A prima facie case, it has been held is not a case which must succeed at the hearing of the main case. However, it is not a case which is frivolous. In other words the Petitioner has to show that he or she has a case which discloses arguable issues and in this case arguable Constitutional issues. It has been held that in considering an application for conservatory orders, the court is not called upon to make any definite finding either of fact or law as that is the province of the court that will ultimately hear the petition. At this stage the applicant is only required to establish a prima facie case with a likelihood of success. Accordingly in determining this application, the Court is not required - indeed it is forbidden - from making definite and conclusive findings on either fact or law.

(30)With the foregoing in mind, I have considered the Petition in the light of the averments set out in the petitioners’ Notice of Motion and its Supporting Affidavits. I have likewise taken into account the responses filed by the respondents as well as the pertinent aspects of their submissions. There is no gainsaying that the impugned Regulations were gazetted vide a Special Issue of the Kenya Gazette Supplement No. 101 of 24th June 2020 as Legal Notice No. 112 of 2020. It is manifest, therefore, that the Regulations have been in force for the past three years.

(31)The gist of the petitioners’ complaint is evident at paragraphs 8 to 26 wherein assertions were made to the effect that the impugned Regulations have crippled a whole line of business entailing the entire motorcycle value chain such that the Micro, Small & Medium Enterprises cannot conduct their business as before. They complained about the requirement for a local assembler to have a bonded warehouse facility with plant and equipment for assembling motorcycles, and contended that only a few big-time assemblers with international support can comply with such a condition.

(32)It is noteworthy, however, that no specific averment was made by the petitioners to demonstrate in what manner they stand to suffer prejudice unless the orders sought are granted, other than the general assertions around reduced rate of sales. On the other hand, the respondents took the stance that the positive effect of the operationalization of the Regulations, from a policy point of view, has been phenomenal, in terms of structured growth of the boda boda sector. Thus, at paragraph 20 of the affidavit of Ms. Mugure, it was averred that:(a)Motorcycle registrations rose 53 per cent in five years, highlighting the growing popularity of boda boda as a means of transport and source of income;(b)Official data shows that the National Transport and Safety Authority (NTSA) registered 285,203 motorcycles in 2021 compared to the 186,434 in 2017; and that the highest growth was recorded between 2019 and 2020 when 36,603 motorcycles were registered.(c)Increased demand for motorcycles has attracted several companies that have set up assembly plants in Nairobi and Mombasa for imported completely knocked down (CKD) units.(d)A recent study by the firm of Car & General which sells motorcycles, their spare parts and other engineering equipment shows that boda boda sector supports six million livelihoods indirectly which translates to about 10% of the country’s population.(e)The sector provides one million direct jobs for riders earning Kshs. 1 Billion daily, underlining its importance to Kenya’s economy; yet the sector has remained unregulated and many traffic accidents have been attributed to the industry.

(33)Granted these divergent positions, it cannot be said that the petitioners have made out a prima facie case with a high likelihood of success; or that the petitioners stand to suffer prejudice unless the orders sought are granted. Indeed, it has not been shown that the public interest weighs in the petitioners’ favour. Hence, I am persuaded to the view taken by Hon. Ibrahim, J. (as he then was) in Bishop Joseph Kimani & Others v Attorney General that:“It is a very serious legal and constitutional step to suspend the operation of statutes and statutory provisions. The courts must wade with care, prudence and judicious wisdom. For the High Court to grant interim orders in this regard, I think one must at the interlocutory stage actually show that the operation of the legislative provisions is a danger to life and limb at that very moment…Conservatory orders to suspend operation of statutes, statutory provisions or even regulations should be wholly avoided except where the national interest demand and the situation is certain.”

(34)The onus was therefore on the petitioners to clearly demonstrate that there is in existence a situation of grave danger akin to danger to life and limb at this very moment to warrant the suspension of the impugned Regulations as an interim measure, pending the hearing and determination of the Petition. I am not convinced that such is the situation in this instance. Accordingly, it is my considered view that the justice of the case demands that the status quo be maintained pending the hearing and determination of this Petition.

(35)In the result, I find no merit in the Notice of Motion dated 19th September 2022. The same is hereby dismissed with no order as to costs.It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT MOMBASA THIS 23RD DAY OF OCTOBER 2023OLGA SEWEJUDGE