[This is a guest post by Joshua Malidzo Nyawa.]
Introduction
In previous posts on this blog, Gautam and I considered the ruling of the High Court of Kenya, where Justice Thande suspended the operation of the newly enacted Finance Act through conservatory orders pending the hearing and determination of the petition challenging the Act both on procedural and substantive grounds. In the previous post, I commended the High Court for acting as the People’s Court by blowing the whistle in the 10th minute of a 90-minute football match, in order to preclude threats of constitutional violations from continuing through the game. Unfortunately, on 28 July 2023, the Court of Appeal in a retrogressive ruling lifted the conservatory orders pending the hearing and determination of an appeal challenging the High Court Ruling.
In this post, I will argue that the Court of Appeal erred in its orders, and that its ruling betrays an underlying deference to the executive that is inconsistent with the principles and premises of the Constitution.
New wine into old wineskins: Considering the test for Rule 5(2)(b) applications
Reading the ruling reminded me of the parable in Luke 5:37 that one should not put new wine into old wineskins. Unfortunately, the Court of Appeal went against this biblical caution. Rule 5(2)(b) of the Court of Appeal Rules grants the Court of Appeal the power to stay the execution of a judgment or ruling or issue an injunction pending the hearing of an appeal. This power is granted in subsidiary legislation under the Appellate Jurisdiction Act enacted in 1977. Although the Court of Appeal Rules 2010 were revoked by the Court of Appeal Rules 2022, the content remained the same. Rule 5(2)(b) provides as follows:
(b)in any civil proceedings, where a notice of appeal has been lodged in accordance with rule 75, order a stay of execution, an injunction or a stay of any further proceedings on such terms as the Court may think just.
The Court of Appeal reiterated the usual test set out by the court as follows:
30. Turning to the nucleus of the application, it is common ground amongst all the parties that the applicants must satisfy the twin principles – the appeal should be arguable and not frivolous and that if the stay is not granted, the appeal will be rendered nugatory.
However, the wording of rule 5(2)(b), and the test developed by the Court of Appeal over the years has been in the context of purely private disputes (private remedies) in civil matters. Therefore, an applicant is only required to show that the intended appeal is arguable and the same would be rendered nugatory if the stay is not granted. However, when transplanted into the public law context, the test adopted by the Court of Appeal is a weak test that ignores the nature and purpose of public law remedies. Public law remedies go beyond the parties and are meant to vindicate the Constitution and safeguard the values in the Constitution. In an application to lift public law remedies, this aspect should feature in the Court’s analysis. To consider if an appeal is arguable and whether it will be rendered nugatory without more defeats the purpose of public law remedies and back-peddles the evolution of conservatory orders in particular.
Put differently, the traditional two-tier test adopted by the Court of Appeal is a test caught up in a time warp: its hands-off character is inconsistent with the Constitution, as it stultifies the transformative potential of Article 23 (which provides for public remedies).
Judicial precedent supports this reading. In the previous post, I pointed out that conservatory orders are public remedies with the supreme court noting that they have a ‘more decided public-law connotation’ meant to secure the enforcement of the Constitution. Due to this public connotation, the supreme court created a test that is different from the test to grant normal injunctions. The Supreme Court in Gitirau Peter Munya vs. Dickson Mwenda Kithinji expressed itself thus
Conservatory orders’ bear a more decided public law connotation: for these are orders to facilitate ordered functioning within public agencies, as well as to uphold 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 orders of stay. Conservatory orders consequently, should be granted on the inherent merit of the case, bearing in mind the public interest, the constitutional values, and the proportionate magnitudes, and priority levels attributable to the relevant causes… However, in the context of the Constitution of Kenya, 2010, a third condition may be added, namely…That it is in the public interest that the order of stay be granted. This third condition is dictated by the expanded scope of the Bill of Rights, and the public spiritedness that run through the Constitution.
Therefore, if the grant of conservatory orders is based on the preservation or enhancement of constitutional values, the Bill of Rights etc., how can an application meant to suspend the conservatory orders issued ignore such a criterion? A proper test in my view is the test proposed by the Supreme Court (for the most recent reiteration – albeit with problematic application – see Kenya Brewers Association). The Court of Appeal while considering the lifting of conservatory orders, should also centre its decision on the enhancement of constitutional values and the bill of rights.
This position is supported by various provisions of Kenyan law. First, the Constitution demands that statutes conform to the Constitution. An interpretation or application of a statute must reflect the values that run through the Constitution. Article 10 provides that the national values bind state organs and all persons whenever any of them applies or enacts any law. This provision alone imposes an obligation on the Court of Appeal to promote the values when it applies a statute. Consideration of a 5(2)(b) application involves the application of statutes to a dispute and they cannot be divorced from the reach of Article 10.
Second, article 20(4) obligates courts to promote the values that underlie an open and democratic society and also the spirit, purport and objects of the Bill of Rights. Again this is a fundamental obligation imposed on the courts. Had the Court of Appeal considered the spirit, purport and objects of the Bill of Rights and in particular article 23, they would have realised that the normal test for a stay of execution is not in line with the constitutional language.
Third, Article 20(3) obligates courts to develop any law to the extent that it does not give effect to a right. The reliance on precedents on the test for a stay of execution by the court of appeal without considering whether the test gives effect to the Bill of Rights is unjustifiable. The court of appeal was required to ‘step over the trip-wires of previous cases and to bring the law into accord with the needs of today’. It is no longer justifiable for the Court of Appeal to rely on previous precedent, especially when such precedent has been overtaken by the Constitution.
Whose public interest?
The most problematic part of the decision however is its consideration of what it termed the public interest criterion. Firstly, the court of appeal considers the aspect of whether the appeal will be rendered nugatory as it considers the public interest (See para 41). Second, the court proceeds to state that the finance act is a unique statute and it is instrumental in defining the government policy as it is used to raise revenue (see para 42). Third, the court proceeds to state that tax is a continuous process and the public can get a rebate for overpaid taxes and finally ‘had the trial Judge considered the substantial and irreversible public interest in this matter, the court would have been hesitant to suspend the whole Act’ (see para 43). The Court of Appeal, therefore, found that the public interest tilted in favour of setting aside the conservatory orders (before anything more, to set the record straight, the court of appeal was factually incorrect. As it will be shown below, it is not true that the high court did not consider the public interest).
It is by virtue of such language that the Court of Appeal’s order sounded more executive-minded than the executive, or engaging in the vocabulary of the executive (“an executive court.”) To consider the collection of taxes as carrying more public interest than adhering to the dictates of the constitution is, in essence, executive’s language: as the High Court noted, public interest lies in ensuring that all laws enacted by parliament conform to the constitution. Thus, as Justice Thande had held in the High Court:
50. … even where as in the present case, the prejudice complained about is the loss of taxes, this has to be balanced with the legal requirement that all taxes must grounded on the law. The Petitioners have raised several grounds upon which they claim that the Finance Act in respect of which conservatory orders were issued, is unconstitutional. My view is that were the Court to set aside the conservatory orders, the Petition would be rendered a mere academic exercise. The further public interest requires that this Court must discharge its constitutional mandate of protecting the supremacy of the Constitution by ensuring that all laws conform to the Constitution.
As I pointed out in the previous blog and I would reiterate the point, the High Court has been straightforward with this argument. Although the High Court has noted in Okiya, the mandatory minimum tax ruling and the ruling suspending the Tax Laws (Amendment) Act, 2020, that the executive is allowed to collect taxes, it has also held that the mere loss of taxes cannot justify the setting aside of the conservatory orders on the simple basis that taxes must be grounded on the law. Secondly, there is no greater public interest other than the ’….the court playing its constitutional mandate of ensuring that all laws and actions of public bodies including imposing taxes conform with the law’.
Even if one were to agree with the Court of Appeal that there is an aspect of public interest in collecting taxes, there is something else that should not be lost: the point is that with such a ruling, the Court of Appeal allows the executive to create a scenario where the executive commits a potential illegality and when taken to court, it responds by stating that its actions should not be suspended because the consequences of suspension are irreversible. As noted in the previous post, the Court of Appeal’s ruling incentivizes constitutional hardball.
Finally, the Court of Appeal is of the view that the public is capable of getting a rebate on overpaid taxes. The Court of Appeal ignores two things: both substantive and practical. First, the Court of Appeal suggests that the public should be compelled to pay taxes based on a law which is capable of being found unconstitutional in future. This ignores the wording of articles 22 and 258 where courts can be approached to prevent threats to the constitution. Second, on practicality: how, precisely, will the citizens who have paid VAT be reimbursed? Is the court suggesting that if the Act is declared unconstitutional, the government will be forced to return the taxes paid to the individuals? This is impractical: for example, if the new taxes cause fuel price rise, on what basis will the refund be calculated?
Ignoring its past precedent
This was not the first time that the Court of Appeal was considering the lifting of conservatory orders. The court in Attorney General & another v Coalition for Reform and Democracy held that constitutional supremacy has a higher place than public interest. While rejecting to lift the conservatory orders, the court noted thus:
When weighty challenges against a statute have been raised and placed before the High Court, if, upon exercise of its discretion, the Court is of the view that implementation of various sections of the impugned statute ought to be suspended pending final determination as to their constitutionality, a very strong case has to be made out before this Court can lift the conservatory order. The State would have to demonstrate, for example, that suspension of the statute or any part thereof has occasioned a lacuna in its operations or governance structure which, if left unfilled, even for a short while, is likely to cause very grave consequences to the general populace.
Taking this precedent into account, the court was supposed to pose the question whether the suspension had created a lacuna in the operations of the government and whether, if left unfilled, there would be very grave consequences to the general populace. This was not demonstrated by the state. This is for the simple reason that the government was able to collect taxes and was able to remain afloat. Further, newspapers have just reported that the government has backdated the taxes upon the suspension of the conservatory orders. In simple terms, there was no lacuna at all.
Conclusion
The Court of Appeal’s strategic plan for 2020-2024 provides for the mission of the court to uphold the constitution of Kenya, the rule of law, advance indigenous and robust jurisprudence that can be benchmarked regionally and globally and provide access to appellate justice to all. Unfortunately, its jurisprudence won’t be benchmarked if it is this kind of jurisprudence: that is, a jurisprudence that answers the question of whether a court of law can be called upon to aid the furtherance of a constitutional breach in the positive, or a jurisprudence that ignores the intestinal fluid that nourishes the Constitution but embraces the executive’s story without question. This jurisprudence is one that is dwarfed by the progressive jurisprudence of the High Court.
It is therefore respectfully submitted that should consider returning to basics: that is, it must be a watchful guardian of the constitution and refrain from judicial deference when threats of constitutional violations are demonstrated at the threshold.
Constitutional Law and Philosophy 