Capital Markets Authority v Jeremiah Gitau Kiereini & Attorney General [2014] KECA 276 (KLR)

IN THE COURT  OF APPEAL

AT NAIROBI

(CORAM: WAKI, KARANJA & MWERA, JJ.A)

CIVIL APPEAL NO. 9  OF 2014

BETWEEN

CAPITAL MARKETS AUTHORITY ...........................................................APPELLANT

AND

JEREMIAH GITAU KIEREINI ....................................................... 1ST RESPONDENT

ATTORNEY GENERAL  .............................................................. 2ND RESPONDENT

(An appeal from  part of the decision of the High  Court of Kenya at Nairobi (Majanja, J.) dated 22nd  August, 2013

in

H.C. PETITION NO.  371 OF 2012)

***************************

JUDGMENT OF THE COURT

Introduction

1. This is an appeal from the  judgment of the  High  Court, Majanja, J. sitting in  Nairobi and  delivered on  22nd   August  2013. There  are  about 2500 pages of documents and proceedings bound  in  four  volumes in  the matter. There  are  also  various volumes of legal  material and  authorities filed. However, the  crux  of the  appeal, which we  shall  distil shortly, is fairly narrow and  it will  determine whether the  appeal stands or  falls. There  are  also  peripheral issues  raised by  the  parties which we  shall endeavor to resolve.

2. The appellant is the  Capital Markets Authority (‘CMA’), a statutory body created under  Section 5 of the  Capital Markets Act  (Cap ‘485A’ Laws of Kenya)(the  Act)  with a  general mandate to  promote, regulate and facilitate the  development of an orderly, fair and  efficient capital market in Kenya.  It is represented in the  appeal, as it was in the  High  Court, by learned counsel Mr. Waweru Gatonye instructed by M/s Waweru Gatonye &  Co  Advocates.  The  first  Respondent, is  Jeremiah  Gitau  Kiereini (‘Kiereini’)  who   was  the   petitioner  before  the   High   Court  and   was described as “a well  known Kenyan, once  a Permanent Secretary in the Office of the  President,  Head  of the  Civil  Service and  Secretary to  the Cabinet, chairman of many Boards   of Directors in  the  private sector” and  as  relevant to  this   matter, the   non-executive  Chairman of  CMC Holdings Limited (‘CMCH’) until his voluntary retirement in March  2011. He  is  represented before us  as  he  was  in  the  High  Court  by  learned counsel Mr.  Njoroge Regeru, of Njoroge Regeru  &  company Advocates. Learned  counsel,  Mr.   Moimbo  Momanyi  instructed  by   the   Attorney General represents the  2nd   Respondent (‘the  AG’). By agreement of all counsel the  appeal is  determined on  the  basis  of written submissions which they all filed.

Background.

3. The  dispute  goes   back   to  September  2011   when   there  was  a  loud implosion  and   explosion of CMCH, a reputable  publicly  listed  motor dealing and  assembling company which has  been  in Kenya  since  1948. The  trigger was  a series  of boardroom wrangles pitting some  Directors against others amidst allegations of non-compliance with corporate governance, conflict of interest and  fraud. Kiereini,   the  non-executive chairman had voluntarily resigned his position in March  2011.

4. Ultimately, CMA had  to intervene in the  interests of the  investing public and on16th September 2011, it suspended the company from trading its shares on the Nairobi Stock Exchange. It then    began  its   own investigations on  CMCH even  as  CMCH itself engaged the  services of Price Waterhouse Coopers  (PWC) to carry out  a forensic audit relating to procurement  of logistics services from  Andy   Forwarding Services Ltd which was associated with one of the  Directors, and PWC did so between September and December 2011. The CMA investigation, through a South African Firm,  Webber Wenzel (‘Webber’) was  commissioned in November 2011  to cover  the  financial operations of CMCH and its subsidiaries, and  in  the  process also  review the  report filed by  PWC. They   submitted their report (‘the  Webber report’)  to  CMA  on  31st January 2012.

5. The Webber report was damning.As relates to Kiereini, it listed several allegations against him, among them:-

(i) Operation of a scheme where manufacturers  (Land Rover Jaguar and Nissan UD) over-invoiced  CMCH Motors  by  2%  and 1. 5% respectively contrary to fiduciary duty  of a director under Article 3. 1.1 of Capital Markets  Guidelines  on Corporate  Governance  Practices by Public Listed Company  in Kenya;

(ii) Establishment of a feeder bank account namely Corival (1996) in Jersey. The account  was funded  by the over invoiced amount charged by the manufacturers contrary  to  fiduciary duty of a director  under   article 3. 1.1 of Capital Markets Guidelines on Corporate Governance Practices by Public Listed Company in Kenya;

(iii) Establishment of a Fair Valley Trust which received funds from the Corival Bank account. The funds  were later invested for  personal  benefit and the  benefit of a select  group  of employees contrary to fiduciary duty  of a  director   under    Article   3. 1.1   of   Capital Markets Guidelines on Corporate Governance Practices by Public Listed Company  in Kenya;

(iv) Use of the Corival  (1996) funds  during  the periods  of 1999-2000 as a vehicle  to lend money at interest at CMC Motors contrary to fiduciary  duty   of  a  director under Article 3. 1.1 of Capital Markets Guidelines  on Corporate Governance Practices by Public Company in Kenya;

(v) Together with  the other members of the board adopting a risky  business model  for the Company of borrowing to lend  and  failed to implement an  “asset/liability” with the activity of borrowing to lend contrary to Article 3. 1.1 (iii) of the Capital Markets guidelines on Corporate Governance Practices by Public Listed Company in Kenya;

(vi) Together with the other members of  the board  he appointed a company secretary who  was  not qualified and  provided  false information  to  the  public on  the status of the company secretary contrary to regulation F.06  of  the  5th  schedule  of  the  Capital  Markets (Securities) (Public offers, Listing and Disclosure) Regulations  2002  and  section   34(1)(b) of  the  Capital Market Act;

(vii) As a member of the board he failed  to exercise effective oversight over the management of the company as evidenced by weak internal audit function and weak internal  control on the operations of  the company contrary to   Article  3. 1.1(ii)  and (v) of the Capital Markets  Guidelines  on Corporate  Governance  Practices by Public Listed Company  in Kenya;

(viii)As a  member of the  board  he  failed  to disclose  the extent of the company’s compliance with  the Corporate Governance Guidelines  issued under the Capital Markets Act and further failed  to explain  areas  of non- compliance in the annual  report of  the company contrary  to  regulation  F.01  and  F.08  of  the   Capital Markets   (Securities)  (Public  officers, listing  and Disclose) Regulations 2002;

(ix) As a member of the board he signed off the accounts which  were not prepared in compliance with  Internal Financial Reporting  Standards  in  the  year 2009 and 2010 contrary to article 2. 4.1  of the CMA guidelines on Corporate  Governance.

6. CMA then, in  March  2012, proceeded to  appoint an  ad  hoc Committee (the committee) of five persons and  notified Kiereini about that appointment and the specific  allegations  made   against  him in the Webber report.  It  asked   Kiereini  to   appear  before  the   Committee between 4th  and  5th  April  2012  in  respect of those  allegations. Kiereini, however,  through  his   lawyer,  protested  the   appearance before the committee,  both by   letter  and in   submissions  made before  the committee on  17th  April  2012. The  lawyer referred to  the  existence of other  civil   suits before  courts  and   questioned  the   effect  of  this   on Kiereini; sought answers to the  nature, scope  and effect of the  mandate, procedure and  objective of the  hearing; questioned CMA’s  involvement in other litigation before courts; and protested Kiereini’s continued harassment   even when he had already appeared before other investigative bodies (PWC and Webber) to give  evidence.

7. On the  protest relating to the  nature, scope  and effect of the  hearings  of the  Committee, Kiereini asserted  that there  was either  total  silence  or lack of clarity from  the notices served by CMA on the following issues:-

(a) The mandate  of  the  Committee  and  the  general   or special functions for which it has been appointed.

(b) The terms  of reference of the Committee.

(c) The procedure to be adopted  during  the hearings.

(d) The  capacity in  which  he  would  appear  before  the Committee, that  is,  whether as  a  party   under investigation or inquiry, whether as a witness  or any other  capacity.

(e) Whether  he would  be entitled to present any evidence and/or  call witnesses  in support of his position.

(f) The  ultimate objective  intended  to  be achieved   or pursued  after  the business of the Committee had been concluded.

8. In its response on those issues, the committee gave various clarifications, guidance and directions. It clarified its terms  of reference as follows:-

“1. To consider the Webber  Wenzel  investigation findings and determine  the validity  of the allegations against Directors of CMC Holdings  Ltd.

2. Give a fair and reasonable opportunity for the past and current Directors whether executive or not of CMC Holdings   and any other   person   the Committee may deem necessary to be heard and defend themselves on the allegations attributed to them.

3. The  Committee  shall  give recommendations  to  the Board of  the  Authority on actions  to  be taken, if any, against the past or current Directors and Management of CMC Holdings  Ltd.

4. The Committee may give recommendations based on the lessons learnt from the hearings of CMC Holdings on ways to improve the capital markets.

5. The Committee’s recommendations shall be considered by the Board of the Authority for enforcement or other appropriate action.”

9. On other issues raised on behalf of Kiereini, the committee clarified thus:

(i) Composition and   Procedure:-  Two  Board members of CMA and three  independent members. The procedure was in written form and was given to Kiereini

(ii) Independence:-  CMA and the committee, in exercise of  statutory  functions  can  carry  out investigatory  as well as   enforcement  actions.  “No regulator is expected to be independent in the sense that it cannot investigate and “prosecute” and “take enforcement action”.    In other   words,   regulators by their very function are in slang investigator, prosecutor, judge and jury”.

(iii)Concurrent court litigation and committee investigation: - There would be no effect. “Our proceedings can go on in parallel  with  those court cases for the reasons that we are performing our statutory function, there  is no court order  barring the  Committee from  proceeding and the subject  matter of the cases in court as we  understand it is  the  PWC report whereas these  Committee’s proceedings are  to  test the  validity of the Webber report.”

(iv) Capacity in which Kiereini will appear:- This is not a criminal or civil  proceeding.  “There is no accused person,  there  is no defendant, there  is no prosecutor, there  is no  plaintiff, our  proceedings do not take the  form  of case for  the  prosecution or  the  plaintiff, case  for  the  defence  and  so  on and  so  forth. There is no examination-in-chief, there is no cross-examination, there is no re- examination. Mr.  Kiereini   like  other   current or former  Directors is invited to appear before  the Committee  in   his   capacity  as  such,   a  former Director, Chairman  of the CMC to be heard  on the findings of the  Webber  report and the  allegations attributed to  him  in  that report, pursuant to  the provisions of Section  26 of the Act. The objective is to afford him his right to natural justice.”

(v) Double jeopardy:  None.  “As he furnished information to the Webber Consultants who then compiled their report and this Committee’s task is to test the validity of that report. Mr. Kiereini  may very  well  be  able  to  show  that the  report is not well  founded   or  what he  told  them  is  not what they  have  indicated in their  report.  The ultimate objective of this Committee is to make recommendations with   respect   to   the   persons affected for consideration by the Capital Markets Authority Board.    If  any  Director for  any  reason does  not want  to  take  advantage of  the opportunity  afforded  him,   the   Committee  will have to make its recommendations based on the material that will have been placed before  it.”

10. Despite those clarifications, Kiereini declined the invitation to appear before the committee, stating thus:

“[Our] client   is of the view that his participation in the proceedings of  the Committee would occasion grave Prejudice to  him  and  to  Court  proceedings  which   are either  pending  or  are  likely  to  be  instituted. We therefore have instructions to notify you, as we hereby   do, that our client will not be appearing before the Committee and will henceforth not participate in   its   proceedings   in   any way.”

11. The committee was not deterred by that rebuff. It served hearing notice on Kiereini to appear before it and call witnesses on 30th   April 2012. When he made no appearance, the committee proceeded to admit evidence which it evaluated and submitted a report to CMA.

12. On 3rd   August 2012, CMA issued its “Report and Resolutions on the Investigations into CMC Holdings Limited”.  On  the  basis  of  the report CMA commenced enforcement action  after  informing Kiereini  of the  outcome of the  investigations on the  allegations made  against him as follows:-

a. On  the allegation that  he  operated offshore arrangements contrary to fiduciary duties of a director; the Authority established that he breached his fiduciary duties   as  a  director  of  the   Company   based   on  the following reasons:

i. That   in   addition  to   being   aware   of   the existence of  the  offshore  arrangements he was  also  intimately  involved  in  the operations of  those  offshore   arrangements and that he benefited from  the offshore arrangements to the detriment of the Company  and its shareholders;

ii. That although the offshore  trust had been established  for   the   benefit  of   the   past, current and  future members of staff  of the company, he curiously benefited there  from despite  having  been  a member of  staff  of the Company;  and

iii.That he was a signatory to some of the correspondence touching on the operation of those offshore  arrangements.

b. On the  allegation  that  he   together  with  the other members of the Board  of the Company adopted a risky  business model for the Company of borrowing to lend  and  failed to implement an “asset/liability management process  to monitor, manage  and   hedge  all   such   risks   associated with the activity of borrowing to lend;

the Authority   established  that   he   breached   his fiduciary duties  as a director of the company based on the following reasons:

i. That the company’s external auditors in the year    2006 had clearly brought to the attention of the Board of the Company the risky nature of the business of the company.

ii. That  there  was  no evidence that the  Board of the Company  was monitoring the implementation  of  the  business  model through hedging  of the  risk  associated  with the model.

iii. That  no   evidence  was   provided  to demonstrate that the  Board  had  taken any action over the management for failure  to implement policies  that it had  established despite  some of the director’s incessant concerns  on how the Company  was run; and

iv. That   the   Company   was  borrowing  money from   financial  institutions  to  purchase vehicles from overseas manufacturers and thereafter use  the  borrowed  funds  to  fund credit extension to drive  sales volume.  This was noted to have been done without the existence of the  necessary  infrastructure to support  the  business   model   thereby exposing  the Company  to great risk and impacted negatively on the profitability the company.

c. On  the allegation that  a  member  of  the Board   of  the Company failed to exercise effective  oversight over  the management  of  the  Company as  evidenced  by  a  weak internal audit function and  weak internal controls in  the operations of the Company;the Authority established that he breached his fiduciary duties  as a director of the  Company  based  on the  reasons  that the  Board of the  Company  established that there  were  grave  weaknesses in   the   internal  controls  of   the   Company   under   Mr.   Martin Forster’s  watch  who  had  commissioned an  internal audit assessment  survey   by  Deloitte  and  whose   recommendations were  never  implemented. The Board of the Company  thus  failed in its duty  to monitor the implementation by the Management of the Company  of the recommendations made.

d. On   the  allegation  that   he   together  with  the  other members  of  the Board   of  the  Company appointed a Company Secretary  who  was  not qualified and  provided false    information  to  the  public   on   the  status  of   the Company Secretary, this  allegation was not established since  there  was no proof  of appointment of an unqualified Company  Secretary.

e. On the allegation that as a Member of the Board  he failed to disclose the extent of the Company’s compliance with the  guidelines  on   Corporate  Governance  Practices  by Public  Listed Companies in Kenya and further failed to explain areas of  non-compliance in  the annual report of the Company; the  Authority established that although he  was  not an  expert, that did  not exonerate him  from  such responsibility and that as the Chairman of the Company (by then), he should have taken responsibility to ensure compliance.

f. On  the allegation that as  a  Member of  the Board of  the Company  he   signed  off the  accounts   which   were  not prepared in  compliance with  IFRS in  the year   2009 and 2010. the authority found  the allegation as established although it took cognizance of the fact those non executive directors, save for accountants, may  not be knowledgeable in IFRS.  That  however did not exonerate the petitioner from  such a responsibility, concluded the Report.

13. CMA further informed Kiereini about the  nature of enforcement action flowing from the  determinations made  by  the  committee and  accepted by the Board. The  following  sanctions  and   penalties  were   imposed under Sections 11(3)(cc), 25A  and 34A  of the  Act:-

“i. disqualifies you with immediate effect from appointment as a director of any listed  company or licensed  or approved person,  including a securities exchange in the capital markets in Kenya  pursuant to  Section  25A (1) (c)(i) of the  Act.

ii. reprimands you for signing  off the accounts for the year ended September 30, 2009 and 2010 not prepared in compliance with  IFRS and  for  non-disclosure on the extent of  the  Company’s  compliance with  the Guidelines  on Corporate  Governance  Practices  by Public Listed in Kenya.

In addition to the  above the  Authority shall:

i.  Recover  from  you  an  amount equivalent to  two  times the amount of the benefit accruing  to you from the offshore  arrangements pursuant to Section  25A(1)(c)(ii) of the Act  upon  the  quantum  of  the  wrongful  amounts being ascertained  by   the Company   or   such other  independent  investigative body; and

ii. Require  you to restitute the Company  the amount of the benefit accruing  to you from  the  offshore  arrangements once the quantum is ascertained by the Company  or such other   investigative body  pursuant to  Section  254  (2)  and (3) of the Act.”

14. CMA also  proceeded to  inform other relevant organs and  parties of the enforcement action taken. They included the Registrar of Companies, the  Nairobi Securities Exchange, the  Central Depository & Settlement Corporation Limited, CMC Holdings Limited, CFC Insurance Holdings Limited and Unga Group  Limited.

That  is the  action which precipitated the  constitutional petition filed by Kiereini before the  High  court on 27th August 2012.

Kiereini’s Petition.

15. Kiereini was aggrieved that CMA had violated several of his fundamental rights and  freedoms under the  Constitution. They  included the  violation of principles of governance under Article 10;  his  right to  dignity under Article 28, as he would no longer associate with his peers  and business associates; the  right to freedom of security under Article 29(d) and (f); the   right  to   privacy  under  Article  31(c);  his   right  to   access   to information protected by Article 35;  his right to own property enshrined in  Article 40;  and  the  right to  equal  protection and  benefit of the  law contrary to  Article 27.  Indeed, he asserted that the  entire proceedings were  carried out  in  breach of Article 47(1) which protects his  right to fair administrative action and Article 50 which guarantees every person the  right to a fair hearing.

16. In  support  of  those   claims,  he  attacked  the   PWC  and   the   Webber reports  which  CMA,  through  the   committee,  relied  on   to   make   its resolutions and  recommendations stating that the  reports were  not only incomplete and  unauthenticated but  were  also  subject of court cases. His evidence, which he gave  before those  investigative bodies was  also ignored. As for the  Committee itself, Kiereini asserted that it was  not impartial as it included Board  members of CMA; that it omitted crucial evidence  he   had   tendered  before  the   other  investigators;  that  it proceeded to deal  with matters that were  already before the  court; and that it never framed any  charges which he would answer before he was condemned in enforcement action.

17. In the end he prayed for the following orders:

(i).  A declaration that the  1st   Respondent has breached the Petitioner’s Fundamental Rights as enshrined in Articles  10,  10(2)  B, 10(2)(C),  28,  29  , 29  (D),  29  (F), 31, 31 (C) , 35, 35 (1) (B), 47, 47 (1), 50, 50(1),  50 (2) (A), 50 (2) (K), 50 (2) (L), 27, 27 (1) of the  Constitution of the Republic  of Kenya.

(ii). A declaration that the  1st   Respondent’s breach  of the   Petitioner’s   Fundamental  Rights   as   above   has caused   the  Petitioner  damage   to  his  reputation  and good name.

(iii). A declaration that to  the  extent that the  same concerns  the  Petitioner,  the  Report  and Resolutions  by the  Board  of  Directors of  the  1st   Respondent dated  3rd August 2012  regarding the investigation into  the affairs of   CMC  Holdings   Limited  is  unlawful  and unconstitutional.

(iv). A declaration that to  the  extent that the  same concerns  the  Petitioner,  the  Report  and Resolutions  by the  Board  of  Directors of  the  1stRespondent  dated  3rd August 2012  regarding the investigation into  the affairs of CMC Holdings  Limited was:

a. In  breach   of  the   Petitioner’s   legitimate expectations.

b. Disregarded material and  pertinent facts relating to the  affairs  of CMC Holdings Limited.

c. Unfair.

d. Unprocedural.

e. Unreasonable and Irrational.

f. In Breach of the Wednesbury Principles.

(v). A Judicial Review Order of Certiorari to bring into this Honourable Court and  quash  the  following resolutions contained   in    the Report    and    Resolutions  of  the  1st Respondent  dated  3rd  August  2012   regarding  the investigation into the affairs  of CMC Holdings  Limited

(vi). A Judicial Review  Order  of Prohibition restraining the  1st Respondent acting  by itself,  its employees and or agents  or through such person as may act on its authority from implementing  any  and  all  the  determinations  and/or resolutions contained in  the  Report  and  Resolutions  by  the Board  of  Directors of  the 1st  Respondent dated  3rd    August 2012  Regarding   the  investigation  into   the  affairs  of  CMC Holdings  Limited touching on  or  affecting the  Petitioner  in any manner  whatsoever.

(vii). An  order  of  compensation directed at  the  1st Respondent compelling it to  compensate the  Petitioner  for the damage  caused to him by its actions  and the quantum of such  compensation  to  be  determined  by  this  Honourable Court.

CMA’s response to the Petition.

18. CMA took the position that it never violated any rights, Constitutional or otherwise, due to Kiereini. As a regulator, it had the statutory duty to ensure the  integrity of the  capital markets in Kenya  and to maintain corporate  governance standards. It therefore followed the   law   in carrying out investigations and taking the  enforcement  measures it did.  The  only  requirement for giving Kiereini a further opportunity to be heard was  in the  process of ascertainment of the  quantum of loss and  restitution under Section 25A(2)and  (3) of the  Act.  CMA further stated that Kiereini was given the  opportunity by the  committee to be heard on  the  specific allegations  made   against him  in  a  conscious effort  to   comply  with  Article  47   of  the   Constitution.  All the committee did after the hearing was to make recommendations which CMA effected in one continuous decision-making process of  the Authority.

19. For his part, the Attorney  General  supported  CMA  and   further contended that the  petition was an abuse  of court process since  there was  a proper channel for appealing any  decision of the  Authority as set out  in Capital Markets Tribunal established under the  Act.

Decision of the High Court.

20. After   considering   the  pleadings,   the    affidavits   in    support,  the submissions of counsel and  the  relevant law,  the  trial court surmised that there was only  one overarching issue,  the  decision of which would address all  the  other minor issues  raised by  Kiereini. The  issue  was whether CMA breached Kiereini’s fundamental rights and  freedoms in the  discharge of its  mandate. The  court further  narrowed down   the overarching issue  and  restricted it to  Article 47  of the  Constitution as applied to the  investigation and  enforcement process, stating:-

“...the issue  at  the heart of  this case  is  the investigation and  enforcement process  which  led  to sanctions being imposed on the petitioner. The violation  of  several  rights  and   fundamental freedoms has  been  prayed in aid  of the petition but I think that all  these  rights are   implicated  in  the process   of  investigation  and   enforcement  and whether or not they have  been  violated depends on whether or not the process  of investigation and enforcement by  CMA  was, “expeditious, efficient, lawful,  reasonable  and   procedurally  fair.”   In  my view, this case  falls  squarely within the purview of Article 47(1) of the Constitution.”

21. The   trial   court  examined  the    jurisdictional   issue  in  limine and determined that it was  only   the  High  Court  which was  vested with jurisdiction by  Article 165(3) of the  Constitution “to determine the question whether a right  or fundamental freedom in the  Bill of Rights has been  denied,  violated, infringed or threatened”  and “the question whether  anything  said   to   be   done   under   the   authority  of   this Constitution or of any  law is inconsistent with,  or in contravention of, this Constitution”. The contention by the Attorney General on the competence of the Capital Markets Tribunal was therefore misplaced.

22. The court also found and held;

That Articles 47 and 50of the Constitution protected separate and distinct rights which should not be conflated: while Article 47 applies to administrative action generally, Article 50(1) applies to a court, impartial tribunal or a body established to resolve a dispute. The invocation of Article 50(2) in particular which relates to criminal cases, as well   as the   argument made   by Kiereini that he was exposed to double jeopardy was therefore misplaced.

The fact that there were  previous investigations did  not preclude CMA from appointing the  Committee to test the veracity of the  issues  emanating from the  forensic report or affording the  persons mentioned in the  report an opportunity to respond to the  allegations.

The investigation by the CMA  did  not constitute harassment of Kiereini as it was  carrying out its statutory mandate.

The existence of civil  suits  relating to the  very  subject of the  investigation and  affecting him  did  not disentitle CMA from exercising its statutory mandate.

The conclusion to be drawn from Section 11 of the Act is that CMA is established as the  chief regulator of the  capital markets  including  protecting  investor  interests  in  those markets.  It  is   in   public  interest  and   in   line   with  the principles of good  governance that the  capital markets be properly regulated.

It is not in doubt that CMA was within its powers in carrying out  the  investigation and  enforcement action against the petitioner.

Section 11A  and  14  of the Actpermit CMA  to delegate its  functions to  various persons including a Committee  of  the  Board and,  therefore,  CMA  was within its powers in  appointing an  ad  hoc  Committee to consider investigations carried on its behalf.

As for the right to a fair hearing by an independent and impartial tribunal, the Committee was composed of two members of CMA Board and three independent members. The    Authority   and    the    Committee   were    exercising statutory functions conferred by the  Capital  Markets Authority Act,  and  no  regulator is expected to  be independent in  the  sense  that it cannot investigate and “prosecute”  and   “take  enforcement  action”.  The committee process was in line with CMA’s mandate of regulating the capital markets industry.

An appreciation of the   mandate of the   Committee was that its function was investigatory.

It is clear from the mandate of the Committee that it was not entitled to take enforcement action but rather make recommendation to the Board of CMA.  It is upon consideration of such   recommendation that the   CMA Board   would then   take and   indeed took   enforcement action.

Kiereini was given an opportunity to  be heard during the investigation but  he  waived this  right by  his  advocate’s letter of 27th April  2012,

The  waiver  applied only   to  the   proceedings before the Committee and  not the  entire process.  Kiereini could  not have  waived his  right to  appear or  make  representations before the  Board  when  such  an opportunity had  not been provided.

Kiereini  was   entitled  to   be   heard  before  enforcement action was taken against him  by the  Board.

What   the   Committee  was   called  upon   to   do   was   to, “consider  the  Webber  Wentzel  investigation findings  and   determine  the  validity  of  the allegations against directors of  CMC Holdings Ltd.” At   no    time   was    the    Committee   required   to    take enforcement action on behalf of the  Board.

The  Board  did  not delegate its  enforcement authority to the   Committee, that  power to  take   enforcement  action against Kiereini, in the  circumstances, could  only  be exercised by the  Board.

Although the  process of investigation and  imposition of sanctions was a continuous process, it is clear  that the  two stages were  separated by the  mandate imposed on the Committee  and   the   ultimate  authority  of the   Board   to impose sanctions for infractions of the Act.

The  fact that the  Committee and  the  Board  were  entitled to  keep  material reflecting opinions, and  deliberations confidential and  privileged under section 13  of the Act did  not discharge the  obligation to the  petitioner to inform him   of  the   charges  before  taking  enforcement  action against him.

Once the  Committee made  the  recommendation for enforcement action against the  petitioner, the  petitioner was  entitled to  be informed of the  formal findings against him   or   the   charges  which  he   was   to   face  and   given adequate opportunity to make  representations on those findings before enforcement action would be preferred.

CMA breached the  petitioner’s right to  fair administrative action  by   failing  to   accord  him   a  fair  opportunity to respond to  the  findings made   by  the  Committee before taking  enforcement  action  and   before  the   same   were made  public.

There was no proper notice for purposes of enforcement action. The petitioner was denied an opportunity to rebut the evidence before the disciplinary   measures were affected and publicised.

It is no defence that the  petitioner knew  of the  allegations against him  or  that an  opportunity to  be  heard had  been presented to the petitioner earlier on before   the Committee  with  a  mandate  to   carry  out   investigations before  a  determination  on  the   sanctions  was  ultimately made by  the  Board.   The mandate of Committee did not include taking enforcement action.

Whether or not the adverse allegations against the petitioner were in fact true or fictitious is irrelevant. It is also no defence that there are no statutory provisions that expressly require an opportunity be given to an affected party to respond before adverse publications following an inquiry are made   against them. All this does nothing to exonerate the CMA of its constitutional duty to accord the petitioner a procedurally fair process even before drawing the conclusions on matters subject to further investigation.

23.     In summary, the trial court concluded as follows:-

“a. That the CMA  was  in  terms of sections 11A  and 14  of the Capital Markets Act entitled to delegate its authority  to an ad hoc  Committee and the Committee constituted in this case  was  properly constituted and  had  the capacity and authority to carry out its mandate.

b. The   proceedings before  the  Committee  did   not violate  the  principle against double jeopardy as the  process  was not  a criminal  trial  and the petitioner was  not the “accused” hence Article 50 of the Constitution could not apply in  the circumstances.

c. Although the  petitioner  was   afforded  a  fair opportunity to be  heard by  the ad hoc Committee and  that opportunity waived by  the petitioner in his   advocate’s letter  dated 27th   April 2012,  the waiver did   not apply to proceedings before the Board of the CMA  which was  entitled to take enforcement action against the petitioner.

d. The mandate of the Committee was    to make recommendation to the Board which would then take enforcement action. The petitioner was not given an opportunity to rebut or respond to the findings of the Committee which formed the basis of the Board taking enforcement action against the petitioner.

e. The CMA was in breach of the petitioner’s right to fair administrative action under Article 47 of the Constitution… As such, the decision reached by CMA in breach of the requirement of the rules of natural justice must be invalidated.

f. The consequence of my    findings is   that the decision of the CMA taking enforcement action against the petitioner must be   set aside. Since this decision is limited to an  examination of the process upon which the decision was  reached, it is  unnecessary   to   examine   the   substantive findings  of  the  PWC   Report  and    the  Webber Report  including whether  in   fact  the  petitioner was  exonerated. The substantive aspect of the reports and the allegations against the petitioner are matters within the statutory mandate of the CMA to deal with.

g. For the avoidance of doubt, the Committee’s findings are not set aside as  the process was investigatory and  the petitioner waived his  right to appear before it. The  Board of CMA  shall be  at liberty to take action against the petitioner upon giving him  reasonable opportunity to be  heard on the  findings  of  the  Committee  and    to  defend himself on  the basis of any  charges or allegations that may lead to enforcement action being taken against him.”

24. With  that, a declaration was  issued  that the  petitioner’s rights under Article 47(1) of the  Constitution were  violated by  the  CMA when  it took  enforcement action against the  petitioner in  the  letter dated 3rd August  2012. The  Report  and  Resolutions by  CMA  dated 3rd  August 2012 regarding  the   investigation  into   the   affairs  of  CMC  Holdings Limited in  as far as they relate to  Kiereini, including the  enforcement action taken thereon and  more  particularly set out  in the  letter dated 3rd  August 2012  issued  by the  CMA, were  quashed.

The Appeal.

25. Kiereini did not challenge any  of the  findings of the  trial court. CMA too did  not challenge most of them. Its  memorandum of appeal contains four grounds and  nineteen sub-grounds which appear prolix and argumentative. That would be contrary to  Rule  86(1) of the  Court of Appeal Rules, 2010. Be that as it may,  the  appeal is essentially, as stated by CMA:

“..against that part of the above-named decision  that decided, whether directly or implicitly, that the CMA was in breach  of the petitioner’s  right   to   fair   administrative  action   under   Article 47(1) of the Constitution, by reason that:-

1. 1.Mr Kiereini’s waiver  of the right  to be heard only applied  to the  proceedings before  the  committee and  not the  entire process;

1. 2. Once the Committee made recommendations for enforcement  action   against  Mr.   Kiereini,  he   was entitled to  be  informed of  the  formal  findings against him, and  given  adequate opportunity  to  appear  or  make representations  to  the  Board  before   enforcement action was taken against him by the Board;

1. 3.The Petitioner could not have waived  his right  to appear  or make representations before the Board when such an opportunity had not been furnished and therefore, the CMA breached Mr. Kiereini’s right  to a fair  administrative action by failing  to accord him a fair opportunity to respond  to the findings of the Committee before the Board took enforcement action;

1. 4. The CMA was in breach  of the petitioner’s right  to fair administrative  action   under   Article  47(1)  of  the Constitution, by reason that there  was no proper  notice for purposes  of enforcement action.”

26. The narrative that follows the  above main  ground may  be summarized, as follows:-

a) The trial court’s findings that Kiereini’s waiver of the  right to be heard was  restricted to  the  proceedings before the  committee and that CMA  did   not  issue   any   notice  before  enforcement action  were   not  based   on   the   pleadings  or   submissions  of counsel.

b) Having found that the committee was properly exercising delegated authority to hear Kiereini under Section 26(2) of the Act, and did in fact accord him hearing rights, the  court failed to appreciate that there was  no  requirement for a further hearing before the  CMA Board.  At all events, the waiver by  Kiereini was absolute for purposes of Article 47  of the  Constitution and remained so unless  he requested a hearing before enforcement, which he did not.

c) Kiereini’s challenge based   on  the  right to  fair administrative action  under  Article  47   was  not  about  denial of  a  hearing before the  committee or the  Board,  but  rather that he was being forced to self-incriminate himself and that CMA was trying to recover  from  him   an   undetermined  sum   of  money  without carrying out  investigations, a futuristic situation covered under Section 25A  (3)of the  Act.

d) There  was  no  statutory requirement for giving hearing notice before enforcement action, or the intention by CMA to impose sanctions. The only duty is to give notice of the  actual decision and   the   reasons for  it.  Under    Section 35   of the   Act,   a dissatisfied party may then appeal thereafter.

e)The court exercised its  judicial mandate erroneously or disproportionately by ignoring the  following relevant factors:-

automatically quashing Kiereini’s disqualification would oust  the  original jurisdiction of the  Appeal Tribunal;

its own  previous interpretation of the  right to be heard before the CMA Board;

the finding that the  principle of double jeopardy was not violated;

the finding that Kiereini was  given a lawful opportunity for fair hearing which he declined;

the unqualified waiver of the  right to  be  heard was absolute;

the findings of the  committee  which the  court did not set aside,  and which require decisive and deterrent action, like  disqualification, in order to safeguard the  integrity of the  capital markets;

Kiereini offered  no new matter or evidence which could  materially cause  any  change of the Board’s decision to  disqualify him  on grounds of corporate impropriety;

the  greater constitutional and  interest rights of the  investing public, the  integrity of capital markets  players,  and   the   statutory  duties  of CMA;

A judge’s modifying  interpretation   can   only apply prospectively, not retrospectively, to affect a disqualification.

Submissions of counsel.

27. There  are  extensive submissions made  by learned counsel on all sides and we can only  but  extract the  salient portions thereof for purposes of this  judgment. Counsel  for CMA summarized and made  submissions on five grounds. The first of those  grounds was summarized as follows:-

“1.  Whether the  issue   of   Mr.  Kiereini’s ‘Limited waiver or lack  of notice were pleaded issues, and  if not,  whether  the  Court could   rest  its  decision on issues  raised suo motu without giving the CMA a meaningful and  substantive opportunity to be heard on this issue”.

28. Counsel  submitted that it was  necessary to  understand the  nature of the  complaint submitted by  Kiereini to  court as relates to  Article 47. In his  view,  the  challenge on CMA’s decision and  sanctions was  based on   10   specific  grounds  enumerated  in   the   Petition,   and   basically centered on  the  allegations that the  committee was  improperly constituted and  could   not carry out  a  fair hearing; the  hearing was geared towards having Kiereini self-incriminate himself, thus  violating his rights; and  the  order for recovery of undetermined sums  of money from Kiereini before carrying out  further investigations. The Petition was never about allegations that:

“(a)   he had been   denied   a hearing   before   the   ad hoc committee of the Board; or

(b)   his waiver  of the  right  to be heard  only  applied  to the proceedings before the Committee and not the entire  process,  such  that he had a legitimate or statutory expectation of being  accorded  a 2nd   or further hearing before  the full board of the CMA on the findings of the ad hoc committee; or

(c) his constitutional rights  had been  violated as there was a lack of proper notice for purposes of CMA’s enforcement  action.”

The court, therefore, erred in considering issues which never arose in pleadings, the evidence or in submissions of counsel.

29. In addition, counsel contended, pleadings in constitutional cases  must be  specific so that the  responding party knows  what to  respond to.  If the   court  raises   issues   it  considers relevant suo  motu,   it runs   the danger of appearing partisan in the  litigation contrary to requirements of judicial passivism. The  right thing to  have  done,  but  the  trial court never did,  was to give  sufficient opportunity to CMA to be heard on the unpleaded issue  of limited waiver of the  right to  be  heard. There  was otherwise no  serious contention between the  parties on  the  absolute nature of Kiereini’s waiver of the  right to  be heard on grounds of self- incrimination. Simply put,  the  court lacked jurisdiction to adjudicate on the   issue   or  alternatively, it  was  an  unjustifiable  abuse   of  judicial discretion.

30. In   response   to   those    submissions,  learned   counsel  for   Kiereini submitted that the  pith  and  substance  of the  petition before the  High Court  was  the  denial by  CMA  of Kiereini’s God  given right to  a  fair hearing  before  he  was   condemned  and   enforcement  action  taken against him.   He  complained that his  fundamental and  constitutional rights  had   been   breached  and   he   specified  and   elaborated  the complaints not only  in  various paragraphs of the  petition but  also  in three affidavits and  two  sets of submissions. The denial of those  rights covered the  entire period from inception to the  purported order for restitution.   CMA countered the  complaints about fair administrative action and  fair hearing by  contending that it had  complied with the Constitution. It submitted at length on  due  process and  enforcement action contending that Kiereini had  waived his  right to  make  any representations before the  committee, hence  no  denial of his  rights. There  was thus  a joinder of issue  upon  which the  court could, as it did, formulate the  issue for determination as the  mandate of the  committee and its relation to CMA Board  which took  enforcement action.

31. Furthermore,  counsel submitted,  it  was   CMA   which  contrived   a laborious, convoluted  and  circuitous process for determining the culpability  of  Kiereini through  several investigative  media including PWC, Webber and the  committee, but  it was not up to CMA to decide at which stages the  affected party would be heard and which ones  to disregard. It was a constitutional requirement that he should be heard at every stage in  that  complex process, and  certainly at the   most crucial one  when  he was being ‘convicted’ or ‘sentenced’. The issue  of denial of the  right to  a fair hearing and  to  fair administrative action throughout the  process was clearly pleaded and  canvassed before the court and  the  allegation that it was  raised by  the  court suo motu  has no basis.  If the  appellant’s counsel needed to address any  issue,  all he needed to  do  was  to  apply to  the  court for that opportunity but  the appellant never did.

32. At all  events, counsel concluded, on  the  authority  of  Odd Jobs vs. Mubia [1970] EA 476, and  other cases,  the  court is entitled to frame the  relevant issues  for determination based  on the  evidential material before it. The  complaint here   was  about an  entire  process and  the court was  entitled to  examine it to  see  if the  same  met constitutional and  legal  thresholds. It would have  been  absurd for the  court to  leave out   the  unconstitutionality  of any  part of the   process despite  clear evidence before it.  Even  on  the   basis   of the   legal   doctrine  of  res judicata,  exemplified in explanation 4ofSection 7of theCivil Procedure  Act, the  court is  entitled to  consider not just the  issues directly before it but  also  those  reasonably incidental to  the  matter at hand.  And finally, as regards constitutional issues,  especially the  Bill of Rights   and   Fundamental rights,  counsel submitted  that  the   court cannot be seen  to  split hairs  and  rely  on technicalities but  is required to  interpret it in  a  purposive,  broad, dynamic,  generous and  liberal manner.

33. The  Attorney  General did  not make  specific submissions on  the  first ground of appeal

34. Grounds 2 and  3 may  be taken together and  were  framed by  counsel for CMA as follows:

“2. For purposes  of Article 47(1) of the Constitution: -

(a)  What  was the  nature  and effect  of Mr. Kiereini’s waiver  of the  opportunity to be heard  on grounds of  fear  of  self-incrimination,  on  a  proper appreciation of the law and evidence on record?

(b) Whether   there   was  lack  of  a  default  notice  in CMA’s  show  cause  letters stating the consequences  of  non-attendance  before   the  ad hoc committee, and if not, whether on a proper appreciation  of  the  clarifying  evidence given  to Mr. Kiereini,  the  process  was in fact  incompatible with  Article 47 (1) of the Constitution,

3.  Whether  there  was,  in  fact,  a right  for  Mr. Kiereini  to  be  heard  on  the  findings of  the ad hoc committee prior  to the final determination by the CMA Board and subsequent enforcement  action,  in  light  of the exclusive statutory appeal  procedure under  Sections 35  and 35A  of the Act and the    broad    powers    conferred   upon    the Capital Markets appeals Tribunal.”

35. The submission on these  grounds is centered on the  waiver of the  right to  be  heard which Kiereini gave  and  on  the  basis  of which the  court found Kiereini was  given an opportunity to  be heard and  undoubtedly waived  his   right.  That  waiver,  according  to   counsel,  was   absolute because Kiereini  was  expressly informed  in  letters and  in  a  formal Ruling   when   he  sought clarification  from  the   committee, about the dates  of the  hearing, the  consequence of non-attendance, the  nature, scope  and  the  effect of the  hearings. The relevant statutory provisions relied on  for the  hearings were  cited as  Sections 25A  and  26(2) of the   Act  and   the   Rules  of  procedure to  be  followed  were   given to Kiereini before the  hearings started. Kiereini was therefore aware throughout, that the hearings were carried out  in contemplation of enforcement action, if warranted. He waived his  rights despite this knowledge  and   CMA  could   not  compel him   to  appear  and   expose himself to  cross-examination or self incrimination if he did  not choose to.  At no  time, according to  counsel, did  Kiereini allude to  a statutory or  legitimate expectation of a second hearing before the  CMA Board. He never suggested that his waiver was limited or was qualified. Other than  the  hearing notice contemplated under Section 25A  of the  Act, the  waiver was absolute in nature.

36. Counsel  further submitted that the  trial court held  that the  committee was   properly  constituted  and   had   the   capacity  to   carry  out   its mandate.  By  dint   of  Sections 11A   and   14   of the   Act   it was  an extension  of  the   CMA   Board    exercising  delegated  authority   and therefore it was  in  fact and  in  law  carrying out  the  functions of the Board  in  hearing the  parties before enforcement action is taken. The waiver  of the   right to  be  heard  before  the   committee  would thus, logically and  legally, be a waiver to  be heard before the  Board.  It was therefore erroneous for the  court to  turn around, as  it did,  and  hold that Kiereini was  not aware or on notice that results of the  committee hearings would lead  to sanctions or that his waiver did not apply to the entire proceedings. In doing this  the  trial judge ignored the  substance of the  hearing notice and  the  clarifications given which satisfied the requirements of Article 47(1) of the  Constitution.

37. In  counsel’s  view,   there were   deliberate and  conscious motives  by Kiereini to  manipulate the  administrative  process and  to  avoid appearance before  the  committee. He  was  indifferent to  the consequences  and  wanted  to  avoid   being  subjected  to  scrutiny on whatever representations he would make  before the  committee of the Board.   The  Judge  was  therefore in  error when   he  gave  premium to Kiereini’s  game   of  judicial  lottery  with  his   constitutional  rights  -- waiving them when  they are  offered and  crying foul to  the  court on grounds arising from his own waiver.

38. As for the  trial court’s view  that Kiereini ought to have  been  given the opportunity to  rebut the   findings of the   board before enforcement, counsel submitted, firstly,  that  the  only   constitutional and  statutory duty imposed on CMA was to give  notice of its  actual decision and  the reasons behind it and  not notice of its  intention to  impose sanctions. There   was   no   statutory  provision  for  bifurcation  of  the   process. Secondly, in the  absence of a statutory requirement, the  court should have  respected the  discretion given to  CMA by  Parliament  to  decide the  most appropriate actions in the  exercise of its regulatory mandate. It was  not open  to  the  court to  substitute its  choice of the  manner of exercise of discretion for that  of CMA.  Thirdly, a  bifurcation of the process would have  resulted in  further unjustifiable and  unnecessary delay, considering that Kiereini had  the  opportunity to  appeal to  the Capital Markets  Tribunal which under Section 35of the Act  had the  power to call  for further evidence, and to set aside,  confirm or vary the   decision of  the   CMA  Board   or  its  committees.  There   was  also further room  for appeal to the  High  court on points of law.

39. The   Attorney  General supported  those   submissions  by   submitting, firstly, on the  issue of notice, that the  letters served on Kiereini by CMA after appointment of the  committee cited Sections 25A and  26(2) of the  Act  and  the  committee made  further oral  and  written clarifications on  the  nature, scope  and  effect of its  hearings. As such,  Kiereini was fully aware  that the  committee, which was  an extension of the  Board, was hearing the  matter in contemplation of enforcement action and no further notice was  necessary save  on the  restitution issue  as required under Section 25A  of the  Act.

40. Secondly, on  whether the  expectation of a second hearing before the Board  was legitimate, he submitted that it was not because, in the  first place,   Kiereini  himself  never  asserted  one   and   secondly,  the   only statutory requirement for notice to  show  cause  is under Section 25A of the  Act.  To hold  otherwise would be  to  encourage a multiplicity of hearings which would impede the  regulatory mandate of CMA. He cited the  case of  Dry Associates Limited vs. Capital Markets Authority [2012] eKLR  180where the  same  Judge had stated in a different case involving CMA and “fairness” in the  exercise of its functions that:

“fairness   does   not   necessarily  require a plurality  of hearings  and representations and counter representations. If  there  were  too  much  elaboration  of  procedural safeguards nothing could  be done  simply  and quickly  and cheaply.   Administrative  or  executive  efficiency  and economy  should not be easily sacrificed.”

41. In  response  to  those   submissions, Kierein’s  counsel contended  that there was admission by CMA that it did not give  notice to Kiereini to be heard  before  enforcement  action  was  taken  against  him.   The only issue  for determination is  whether this   was  necessary. In  counsel’s view,  the  right to a fair hearing was one  of those  that the  Constitution guards so jealously that under Article 25  it may  not be  limited. Fair trial, in counsel’s submission, entails fair hearing, fair administrative action and evidence obtained lawfully. Anything done  contrary to these tenets would be struck out  and  cannot be saved  even  by  public policy considerations.  So too   the   report  arrived  at  by   CMA  through  the contrived process of several investigative bodies required the opportunity for Kiereini to  be heard at each  stage. In support of those propositions counsel cited  Article 259(1)  of the  Constitution which provides  for  the   manner  of  interpretation  of  the   constitution  ‘to promote its  purpose,  values  and  principles, advance  the  rule  of  law and the  human  rights  and fundamental freedoms in the  Bill of Rights, permit development of  the  law  and  contribute to  good  governance’.

Also under Article 20(3), the  court shall  adopt the  interpretation that favors the  enforcement of a right or fundamental freedom.

42. Citing the  case  of Kenya Anti corruption Commission vs. Lands Limited & Others Misc   Appl. 583/2006  (UR), counsel submitted that the  right to  a hearing was  a key  component of due  process and therefore an  individual must be  informed of the  fact that a  decision which will  have  adverse consequences for him  may  be  taken and  to notification of possible consequences of the  decision. There cannot be an implied waiver of the fundamental right to  be  heard. It must be express and unequivocal as it was before the committee but not before the CMA Board.  If there is  any  ambiguity as  to  whether there was  a waiver or not, then  an implied absence of a waiver should be made.

43. Counsel emphasized   that the investigatory and enforcement procedures  in  this case  were designed to  be  distinct and  separate stages.  The committee declared that it was merely investigating and would thereafter make   recommendations to the   Board.   Since  there cannot be  a conviction on  the  basis  of investigations without a trial, Kiereini was  entitled to  expect, and  legitimately so, that he  would be heard by the  Board  in the  ensuing trial or enforcement stage. He would also  be entitled to be heard in mitigation before sentence, even  in the event of conviction.

44. The final issue was based on Ground 4 of the memorandum of appeal and was stated and argued in the alternative, thus:

“Without prejudice to the above, the learned Judge, in any event, erred in fact and in law, and therefore exercised his judicial mandate erroneously and/ or disproportionately by proceeding to automatically quash the petitioner’s disqualification.”

In essence  it was argued that, even  assuming, arguendo, that notice to Kiereini was  necessary before enforcement action was  taken and  that he legitimately expected a second hearing before the  Board,  it was not justifiable for the  court to  quash   the  final report as  well   as  all  the enforcement measures already taken. That is because the enjoyment of the rights of any individual must be balanced against the rights of others. In this   case, the court should have   applied sound   objective analysis of the evidence and legal principles to justify the protection of Kiereini’s right to be heard against the collective rights of others to be protected through enforcement action.

45. According to counsel, in that balancing act,  the  court failed to consider that there was no statutory requirement for notice and  there was substantial  compliance with  Article  47of  the   Constitution;  that Kiereini did  not make   any  request to  be  heard before enforcement action after waiving his  right to  be  heard before the  committee; that having  upheld all  affirmative  defences to  the   petition by  CMA,  the court had  no  jurisdiction to  continue with the  rest of the  petition as there was  an  exclusive appellate mechanism under the  Act;  that the Appeals Tribunal set up  under  Section 35A  of the  Act  ousted the original jurisdiction of the  court to  quash  the  disqualification and  gave Kiereini  a  second  chance  to   re-litigate  his  rights if  any   had   been infringed;  that  in   view   of  the   Dry  Associates case(supra),  the threshold of a fair judicial process was not guaranteed by a multiplicity of administrative hearings; and  finally that the  court completely disregarded public interest considerations in the  matter.

46. In  conclusion, counsel submitted that the  petition by  Kiereini was  in truth a merit appeal against the  disqualification by  CMA and  not a constitutional issue;  that the  decision of CMA was  Wednesbury reasonable and  rational in  the  context of the  imperative of enforcing laws  and  policies that promote a stable, efficient, effective and  vibrant capital market for the  benefit of the  investing public; and  that any capital markets regulator, properly directing itself on the  law,  evidence and  facts relating to  CMCH, would have  taken the  same  enforcement action as CMA did.

47. The AG, in supporting this ground of appeal, was emphatic that the Capital Markets Tribunal had the jurisdiction to deal with Kiereini’s grievances   since    they   were    based    on    a   decision   of   CMA.   A constitutional petition cannot be a substitute for exclusive appellate mechanisms set up   by   Parliament.   The  AG  cited  several  previous decisions which,  in  his  submission, supported  the   view   that where there was an alternative remedy, or where Parliament has set up a statutory appellate procedure, it is only  in  exceptional circumstances that the  court would intervene before the  procedure is exhausted. The cases include:

(a) Bernard Samuel Kasinga vs. The  Attorney General & 7 Others (High  Court Petition No. 402  of 2012)

(b) Vania Investment  Pool   Limited  vs.  Capital  Markets Authority & Others (High  Court Misc. CA No. 139  of 2014)

(c) Michael  Wachira  Nderitu  vs.  Independent  Electoral and  Boundaries Commission & 2 Others [2013] eKLR.

(d)   Republic  vs.  National  Environmental  Management

Authority [2011] eKLR

(e) Rich  Productions Limited vs. Kenya Pipeline Company & Another [2014] eKLR at page  14 thereof where the  court stated that: -

“The  reason why the Constitution and  the law establish different  institutions  and  mechanism  for dispute   resolution in  different sectors  is  to  ensure that  such  disputes   as  may   arise  are  resolved   by those with the technical     competence and the jurisdiction  to   deal   with   them. While   the   Court retains   the   inherent  and   wide   jurisdiction  under Article  165   to   supervise  bodies   such   as  the   2nd respondent,  such  supervision  is  limited  in  various respects  which  I need  not go  into  here. Suffice to say  that it  (the   court)   cannot  exercise such jurisdiction in circumstances where parties before it seek to avoid mechanisms and processes provided by  law,  and  convert the  issues  in  dispute  into  constitutional  issues  when  it is  not.”     (Emphasis added).

(f) Republic v  Ministry  of Interior  and   Coordination  of National Government & Another Ex-Parte ZTE Corporation & Another [2014] EKLR.

48. Moreover, he submitted, Article 159 (2) (c)of the  Constitution now provides that the  courts shall  promote alternative forms of dispute resolution. It  is  only   by  doing  so  that  Tribunals established under various legislations like  the  Capital Markets Tribunal would be capable of  discharging their  functions  as  they  also   have   persons with  the relevant expertise to deal  with the  issues  raised.  Above  all,  this  would be a progressive way  of decongesting the  courts.

49. On  the   issue   of  public  interest,  the   AG  submitted  that  there  was immense public interest involved in the  matter and  particularly the paramount  consideration of the   role   played by  CMA  in  maintaining market integrity,  investor confidence and  protecting the  interests of public investors where acts  of gross  corporate impropriety are established. A  balance must therefore  be  struck between the  rights and  privileges of an individual to  remain eligible for appointment as a Director  and   those   of  the   investing  public  to   be   protected  from corporate misfeasance. In this  case, the  most appropriate sanction was disqualification  of Kiereini especially when  it was  established that he was   involved  in   the    quasi-criminal  activity   of  making  Tax   free payments to  Directors. See  Kenya National Examinations Council vs. Republic, ex  Parte Kemunto Regina Ouru [2010]  eKLR  and Vania Investment Pool  Ltd vs. Capital Markets Authority & Others Hct  Misc  CA 139 of 2014.

50. Responding to those  submissions, counsel for Kiereini, vehemently defended the  jurisdictional position taken by  the  trial court. He cited Article 165(3) (a)and  (b) as well  as Articles 22  and  23(1) of the Constitution which give   firm  jurisdictional grounding to  the  High Court  on  matters of Constitutional interpretation and  implementation to  any  person who  knocks at its  doors.  He also  cited several decided cases which have applied those provisions of the  Constitution including: County Government of Nyeri vs. Cabinet Secretary, Ministry of  Education, Science and  Technology & Another [2014]eKLR; Joseph Mwenda  Mbuko vs. Provincial Police Officer  Central  Police  &  2    Others    [2013]eKLR;  Samura  Engineering &10 Others   vs   Kenya Revenue Authority [2012]eKLR 220;

51. In   counsel’s  view,    those    authorities  support  the   proposition  that Articles 165(3)(a)  and  (b) as  well  as  23(1) of the  Constitution, irrespective of any  other  provision of the   constitution  or  any  other written law,  confer on the  High  Court the  jurisdiction to  determine the question whether a right or  fundamental freedom in  the  bill  of rights has  been   infringed. That  jurisdiction  cannot be  taken away   by  any other law,  either expressly or  by  implication. Counsel  contended that Kiereini’s cause  of action lay  in  the  fact that a violation of his  rights and  freedoms had  occurred and  this  had  to  be  remedied. The  court’s jurisdiction was  therefore exclusive and  not dependent on  any  other remedy which may  be available to an aggrieved citizen. In sum,  the establishment of the  Capital Markets Tribunal under Section 35  and 35A  of the  Act did  not take away  the  jurisdiction of the  court under the  Constitution.

52. As regards the  submission that the  court ignored its  own  decision in the   Dry   Associates Ltd  case   (supra)  on  multiplicity  of hearings,counsel asserted that  the  case  was  distinguishable on  the  facts and pointed out  that the  trial court in fact made  that distinction. The most important finding was  that, on the  facts, Dry  Associates Ltd  had  been given  sufficient   opportunity   to    present   its    case    and    that   the constitutional  requirements had  been  met, hence  the  finding in  law that Article 47 had not been  breached.

53. Turning to  invocation of “public  interest” as a relevant consideration, counsel submitted that it cannot be used  to as a shield by a party who brazenly violates a citizen’s constitutional rights. The  relevant public policy was  one  that requires that all  state organs obey  the  law.  They cannot  breach  the   law   under  the   pretext  of  advancing undefined “public   interest”.  In  counsel’s  view,   public  interest  and   individual rights can  co-exist and  it would not be  right to  stifle or  extinguish individual rights at the  alter of enforcing public interest. At any  rate, the   right  to   a  fair  trial,  and   the   right  to   a  fair  hearing  are   so fundamental that they cannot be  limited even  by  public interest. For emphasis,    the    cases  of    Kenafric    Industries   Ltd   vs.   The  Commissioner of Domestic Taxes & 4 Others [2012] eKLR  and Eric Okongo Omongeni vs. IEBC & 2 Others [2013] eKLR  were  cited for the  proposition that administrative bodies have  a duty to act in  accordance with the  dictates of Article 47(1)which requires fair and efficient administrative action and that they must comply with the rules  of natural justice when  exercising quasi-judicial functions.

The issues for determination.

54. We stated at the  opening paragraph that this  appeal will  stand or  fall on the  issue  at the  centre of the  appeal which, in our  view,  is whether, on the  facts, the  Committee merely carried out  “investigations” and left out“enforcement action” for the  CMA Board  or in one seamless process, the  committee, as  an  extension of the  Board,  covered both the  investigation and  enforcement. Depending of the  finding on those facts, the  conclusion will  flow in law to determine whether the  rights of Kiereini under Article 47of the  Constitution were  infringed. The highlighting of that issue  does  not detract from the  primacy of the jurisdictional issue  which on its  own  is also  capable of disposing of the appeal. In the  periphery are:-  the  issue  of reliance by the  trial court on unpleaded matters;    the   twin   issues   as  to  whether  Kiereini  had   a legitimate expectation of a second hearing before the  Board  and  if so, whether he was entitled to notice; and,  finally, what is the  place,  if any, for “public interest” consideration in the  matter.

Guiding Principles.

55. As  this   is  a  first  appeal, we  must, as  always, reconsider,  reassess, reappraise  and   re-evaluate  the   factual  evidence  on   record  in   the manner of a retrial and to reach  our own conclusions in the  matter. See Selle &  Another v. Associated Motor Boat Co Ltd & Others [1968]  EA   123.  Ordinarily, we   would  defer  to   the   findings  and conclusions of the  trial court, but  will  readily interfere if they are based on   no   evidence,   or   on   a  misapprehension of  it  or   the    court demonstrably acted on wrong principles in making those  findings. This Court  is also  not bound to  accept the  trial judge’s findings of fact if it appears, that  he  has  clearly failed on  some   material point to  take account of particular circumstances or probabilities material to an estimate of the   evidence.  See   Mwangi vs. Wambugu [1984]  EA 453.

56. In relation to  the  exercise of discretion of the  trial court, interference with such  discretion is circumscribed and  we  need  only  cite  what this Court  stated in   MBOGO & ANOTHER vs. SHAH   [1968] EA  93  at page  96, thus:

“An appellate court will  interfere if the exercise of the discretion is  clearly wrong because the judge has  misdirected himself or acted on matters which it  should not   have acted  upon or failed  to  take into consideration matters  which it  should have taken into consideration and  in doing so arrived at a    wrong  conclusion. It   is    trite  law    that  an appellate  court should not  interfere with the exercise of  the discretion of  a  judge unless it is satisfied  that  the  judge  in   exercising  his discretion has  misdirected himself and  has  been clearly wrong in the exercise of the discretion and that as a result there has  been misjustice.”

57. Assuming at this  stage that the  matter involves constitutional interpretation, there is  not much debate on  the  principles governing such interpretation and therefore we shall  not belabour them.

“...the  Constitution is  not an  Act  of Parliament and is  not to be  interpreted as  one.  It is  the supreme law  of the land; it is a  living instrument with a  soul and  consciousness; it embodies certain fundamental values   and     principles   and     must   be    construed broadly, liberally and  purposively or teleologically to give effect to those values and  principles; and  that whenever the consistency  of any  provision (s) of an Act   of Parliament with  the  Constitution are called into question; the court must seek to find whether those provisions meet the values and  principles embodied in the Constitution.”

see  Njoya & Others vs. Attorney General & others [2004]  EA 274.  See  also   the   decision  of  the   Court   of  Appeal,  Tanzania,  in Ndyanabo vs. Attorney General [2001]  EA  485 which stated in part:

“the Constitution .. is  a  living instrument, having a soul  and  consciousness of its own  as reflected in the Preamble and  Fundamental Objectives and  Directive Principles of State Policy.  Courts must, therefore, endeavour to avoid crippling it by  construing it technically   or  in   a   narrow  spirit.     It   must  be construed in  time with the lofty purposes for which its makers framed it.  So  construed, the instrument becomes a solid foundation of democracy and  rule of law.    As  was   correctly stated  by   Mr. Justice  E.O. Ayoola, a  former  Chief Justice  of The  Gambia:… “A timorous and  unimaginative exercise of the judicial power of constitutional interpretation leaves the constitution a stale and  sterile document.”

58. In  the   current  Constitution,  which  the   people  of  Kenya   ‘adopted, enacted and  gave   to  themselves and  future generations’  in  August 2010, several Articles come  to mind that serve  as towering beacons of constitutional interpretation. Article 10  enshrines the  national values and principles of governance which bind  all state organs, state officers, public officers and  all  persons whenever anyone of them  applies or interprets any  law  or  implements public policy decisions. Such  values include good  governance, integrity,  transparency and  accountability. Article 20(1) provides that the  Bill of rights shall  apply to and  bind  all state organs and  all persons, while Article 20(3) commands the  court to  develop the  law  to  the  extent that it does  not give  effect to  a right or fundamental freedom and  adopt the  interpretation that most favors the  enforcement of a right or  fundamental freedom. The  court is also commanded under Article 20(4) to  promote the  values that underlie an  open   and  democratic  society based   on  human dignity,  equality, equity and  freedom and  the  spirit, purport and  objects of the  Bill  of Rights. Article  22(1)  gives  every person the  right to  institute court proceedings claiming that a  right or  fundamental freedom has  been denied, violated or  infringed or  is  threatened.  Finally Article 259(1) requires that the  constitution be interpreted in a manner that promotes its  purposes, values and  principles, advances the  rule  of law,  and  the human rights and    fundamental freedoms in the  bill  of rights, permits the  development of the  law,  and contributes to good  governance.

Analysis and Determination.

59. We have  considered the  pleadings, affidavits on record, the  findings of trial court, the  submissions of counsel, the  authorities cited and  the applicable law.  We  must first dispose of the  jurisdictional issue  since jurisdiction is everything and the  court would down  its tools  without it.

“A Court’s jurisdiction flows from either the constitution or legislation or both.   Thus, a Court of law   can   only   exercise jurisdiction as conferred by the constitution or other written law. It cannot arrogate itself jurisdiction exceeding that which is conferred upon it by law…. The issue as to whether a Court of law has jurisdiction to entertain a matter before it, is not one of mere procedural technicality; it goes to the very heart of the matter, for without jurisdiction, the Court cannot entertain any proceedings…..Where the constitution exhaustively provides for the jurisdiction of a Court of law, the Court must operate within the constitutional limits. It cannot expand its jurisdiction through judicial craft or innovation.   Nor can Parliament confer jurisdiction upon a Court of law beyond the scope defined by the Constitution.  Where the constitution confers power  upon  Parliament  to  set  the jurisdiction   of   a   Court   of   law    or  tribunal,   the legislature  would be within  this  authority  to prescribe the jurisdiction of such  a court or tribunal by state law.”

-see   the   Supreme  Court  decision  in  Samuel  Kamau Macharia & Another vs. Kenya Commercial Bank Limited & 2 Others [2012]  eKLR  .

60. As we understand it, the  objection taken on jurisdiction before us, as it was  before  the   trial  court, is  that  there was  nothing constitutional about the  matter placed before the  High  Court which was no more  than a merit appeal against the  decision of   CMA. As such  Parliament  has enacted in Sections 35 and 35A of the  Capital Markets Act, an alternative remedy of a Tribunal to  resolve the  issues  raised. The trial court considered this  objection and found that it was being called upon to     intervene  in   a   matter   where  a   party   alleges  breach  of  his fundamental  rights  and   freedoms  and   that  the   issue   squarely  fell within the  jurisdiction of the  High  Court  by  dint  of Article 165(3)(b)and  (d)(ii)of the  Constitution. No other adjudicative body, including the  Tribunal, had that mandate.

61. Those relevant Articles provide as follows:-

165. (3) Subject to clause (5), the High court shall have—

(a)  ……….

(b) jurisdiction to determine the question whether a  right or fundamental freedom in  the Bill  of rights has  been denied, violated, infringed or threatened;

(c) …………….

(d)(ii) the question whether anything said  to be done under the authority of this Constitution or of any  law  is inconsistent with, or in contravention of, this Constitution.

Clearly, therefore, there is   express jurisdiction flowing from the supreme     law   itself.  The argument thus   turns on whether a party can ignore an    existing alternative remedy, and whether indeed the matter in issue was   constitutional. We have examined the petition filed before the High Court citing   several   provisions   of   the Constitution and alleging violations  thereunder. Most of those  complaints were  swept by the  wayside in the  judgment  of  the    trial  court  and   none    of  the    parties  has complained about  that, save  for the  one  allegation of violation of fair administrative action under Article 47 of the  Constitution.

62. The relevant part of that Article provides as follows:

47.  (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.

Under  sub-Article 3, Parliament is enjoined to enact legislation to give effect  to  those   provisions  and   under  the   Fifth  Schedule of the Constitution it  had  four years   from promulgation  to  complete that process, subject to extension. No submission was made  by any  of the parties to establish the  existence of such  legislation and  we  are  not aware of any.  In the  event, we cannot fault the  trial court for resorting to the  Constitution itself in resolving the  allegations placed before it. The existence of an alternative remedy, in this  case the  Tribunal, would not be  efficacious  because  the   High   Court  does   not  share   with it  the powers    under Article 165  of the  Constitution. We are  satisfied that the issue  laid  before the  High  Court under Article 47  was constitutional in form and  substance and  consequently the  right forum for its  adjudication was    the  High  Court. We  are  also  satisfied that the  issue  arose  from the pleadings and the  evidence before the  court and was not raised by the court suo motu,  as submitted by  the  appellant’s counsel. The appeal relating to jurisdiction thus  fails.

63. And now to the crux of the appeal. Was it “Investigation only” or both “Investigation and enforcement action”. That is the question relating to the work of the committee appointed by CMA.

64. There   is  no  controversy  regarding  the   vital role   played by  CMA  in attempting to  achieve the  aspirations of the  Capital Markets Act  of ‘promoting, regulating and facilitating the  development of an orderly,fair  and  efficient capital   market’ in  this  country.   It is  only   through effective corporate management and  regulation that a robust capital market which safeguards the  interests of both  local  and  international investors can  be assured. That is why  CMA is given fairly wide  powers and  functions under the  statute. It is the  manner of exercise of those powers that  is  in  question, and  it  becomes necessary therefore to examine the  relevant legislative provisions and  the  evidence relating to the  exercise of the  powers.

65. Under  Section 11(3) of the  Act,  no less than  29 wide  ‘powers, duties and functions’ of the  Authority (also  referred to as “the Board”) established under Section 5 of the  Act  are  listed. Section 11(3) (w)makes such  powers unlimited as the  Board  may  “do  all other  acts  as may  be incidental or conducive to the  attainment of the  objectives of the  Authority or the  exercise  of its powers  under  this  Act”. Very  wide powers indeed and  therefore the  reason for caution in  the  manner of exercising them to avoid  abuse.  There  may  be some  truth in the  adage that ‘power  corrupts and absolute  power corrupts absolutely’.

66. The  Act  in  Section  11A   further gives   the   Board   the   discretion to delegate its  functions to,  inter  alia,  a “Committee of the  Board”. Such delegation may  be  revoked at any  time and  the  delegation does  not prevent the  Board  from performing the  delegated function. In  other words,  the   Board   and  its  own   committee may   carry out   the   same function simultaneously. There  is further general discretion under Section 14(1) of the  Act  to  appoint “Committees, whether of its own members or otherwise, to carry  out  such general  or special  functions as may be specified by the Authority and may delegate to any such committee such of its powers as the Authority may deem appropriate.” Sub-section (2) however, makes it mandatory for the  Authority to establish:

(a) committee to  hear  and  determine complaints of shareholders  of  any   public   company  listed   on  an authorized  securities exchange,  relating  to  the professional  conduct   or  activities of  such  securities exchange  or  such  public   company,  or   any   other person   under   the   jurisdiction  of  the   Authority  and recommend  actins  to  be  taken,   in  accordance  with rules established by the  authority for  that purpose; and

(b) a committee to  make recommendations with  respect to  assessing   and awarding  compensation     in respect  of  any application made in accordance with  rules established  by the Authority for that purpose.(emphasis  added)

It is evident from the  diverse provisions in  those  sections of the  Act that  the   Board   must  make   a  choice  of  the   form  and   nature  of delegation of its  powers and  functions. The trial court found and  held that CMA  was  within its  powers  to  appoint the   ad  hoc  committee under  Sections 11Aand  14of the  Act.  With   respect, that is not entirely correct. It is only so in so far as the general power exists. The Board   must go further and   specify which provision of the   Act   is invoked.

67. We have examined the appointing document (‘JK 8’ in the record of appeal) and confirmed that CMA invoked Section 14(1) of the Act.  It was bound under that sub- section to state whether the  committee was of ‘its own  members or  otherwise’; whether there were   ‘general  or special  functions’ to  be carried out;  specify the  ‘function’,  and  specify which of CMA’s  powers  were  delegated. In that document, referred to as   “Terms of Reference” (TOR), CMA listed 13   specifications, among them, “The Purpose and Responsibilities” of the ad hoc committee. We have reproduced these in paragraph 8 of this judgment as clarified by the committee at the instance of Kiereini. What the committee did   not tell   Kiereini, but   was  part  of the   TOR,  was  the specification that the  committee was required to:

“report and make recommendations to the Board of the Authority  which   shall  thereafter  notify  adversely mentioned persons  in writing of the  decision  of the committee”.

68. From  our  own  examination and  evaluation of the  specified functions of the   committee,  its   main   function  was   to   verify,  by   calling  further evidence, the  investigation report and  findings of the  Webber report. It was to carry out further investigation. Beyond that, it would “give recommendations to the Board on actions to be taken, if any….”

We do not have  the  benefit of the  report submitted to the  Board  by the committee or  the  recommendations made  as these  were  confidential, and  there is  statutory  provision for that  confidentiality. What  is  on record  is  the   letter  dated  3rd  August   2012   entitled  “Enforcement Action” and which summarizes the  allegations made  against Kiereini before the  committee, the  determination on each  of  those  allegations, and    the    sanctions   imposed.   These    have    been    reproduced   in paragraphs 12, 13 and 14 of this   judgment. Was it the   committee which carried out the entire process?

69. It  is   difficult  to   say;   firstly  because we   have   no   record  of  the committee’s report and  recommendations; secondly, there was no specification by the  Board  of delegation of its  function of imposition of ‘sanctions’  under  Section  11(3)(cc),  ‘additional  sanctions’   under Section 25A,  or  ‘offences and  penalties’ under Section 34A  of the Act.  All these   functions remained reposed in the Board   throughout. What  is clear  from the  record is that CMA indicated what it would do with the  report once  it was  submitted to  the  Board; that is, as stated above: “the Authority... shall  thereafter notify adversely mentioned persons  in writing of the  decision  of the  committee”.  In all probability therefore,   CMA   envisaged   a   stage   after   investigations   by    the committee, when   it would notify Kiereini about the   findings of the committee and record any mitigating circumstances from him before exercising its coercive power of sanctions and other penalties.

70. The  above  analysis  leads   us  to  the   conclusion that  the   committee carried out  investigations only  and  that the  power of enforcement was not  delegated  to   the   committee.  Such   power should have   been delegated expressly in line with the  provisions of the  Act  if that was the  intention. In our view, the committee was not given a carte blanche by CMA so  that it would supplant the  Board  in  the  entire process of investigation  and   enforcement.  What   is   the   consequence of  this finding?

71. Logically, it leads  us to  the  consideration of the  peripheral issue  as to whether Kiereini had a legitimate expectation that he would have  a full second hearing before the  Board  and  if so,  whether he  was  given an opportunity to be heard as the  Constitution and  rules  of natural justice demand. On our own evaluation of the evidence on record, we answer the   first limb   in the   negative.  That  is  because it  is  plain   beyond argument that Kiereini was  given the  opportunity to  appear and  be heard before the  committee on the  specific allegations that were  made against him.  He made a conscious decision not to appear before the committee. In a manner of speaking, he made his bed and he ought to sleep  in it. The proceedings before the committee were therefore valid as were the findings which were unchallenged. Indeed it was one of the findings made by the trial court as follows:

“For the avoidance of doubt, the Committee’s findings are not set aside as the process was investigatory and   the petitioner waived his right to appear before it.”

None of the parties has challenged that finding. Having so found, however, the trial court made an order quashing all the findings of the committee and  requiring CMA to hear  Kiereini on all the  evidence that led  to those  findings. With respect, we think the finding and the order are contradictory and the trial court was in error in that respect. The order must be interfered with to accord with the finding. In our  view, the   finality  of the   process  before  the   committee  gave   rise   to  an appeal, if the  affected party so  desired, in  accordance with the  Act and not to a challenge of the  process before the  High  Court.

72. What deserved a constitutional challenge was the  summary imposition of sanctions and  other penalties before giving Kiereini an  opportunity to be heard in mitigation. Some of the  findings made  by the  committee bordered on  criminal offences and  yet penalties were  imposed before hearing the  affected person. The  analogy by  counsel for Kiereini that an opportunity is always given to a convicted person to mitigate before sentence is not entirely out  of place  in the  circumstances of this  case. After the  hearing, the  Board  may  well  arrive at the  same  conclusion but  it would have  passed  muster in complying with the  law.  There  is no express  provision  in   the   Act   for  a   hearing  before  imposition  of sanctions and other penalties, but  the  right to fair administrative action which includes fair hearing is so jealously guarded by  the  Constitution that we  would apply Article 10  on  transparency and  accountability, and  Article 20(3) to  develop the  law  to  the  extent that it does  not give    effect  to   a   right  or   fundamental   freedom  and   adopt  the interpretation  that  most  favors  the   enforcement  of  the   right  or fundamental freedom.

73. Finally, as regards considerations of public interest to  override constitutional   requirements  of  fair  administrative   action  and   fair hearing, we  need  only  state that those  rights of the  individual are  so fundamental that they cannot be limited even  by public interest. In this regard the  cases of  Kenafric Industries Ltd vs. The Commissioner of Domestic Taxes & 4 Others [2012]  eKLR  and   Eric Okongo Omongeni vs. IEBC & 2 Others [2013] eKLR are instructive.

Disposition.

74. We have come to the  conclusion that this  appeal is partly meritorious and partly not. We accordingly give the following orders:-

(a) We allow  the  appeal  in as far  as it questions the  process ending  with  the  findings made  by  the  committee on  the specific  allegations placed  before  it for  investigation, and reiterate that the  findings were  made  procedurally,  and are  valid   until   they   are  set aside  by  a  lawful   order  on appeal.   The  order   of  the   trial  court  setting  aside   the findings of  the  committee, which  were  accepted   by  the Board  as  listed   in  the   letter  dated   3rd  August  2012   is hereby  set aside.

(b) We dismiss  the  appeal  in so far as it questions the  finding of  the  trial court that Article 47  of  the  Constitution was breached since  Kiereini  was  not given  the  opportunity to be   heard   before   sanctions    and   other   penalties  were imposed  on him.

(c) The sanctions,  penalties  and  offences imposed   by  the Capital  Markets  Authority under  Sections 11(3)(cc), 25Aand  34A  be and  are hereby   set aside.  CMA shall  be  at liberty to  re-impose them  if  they  are  merited only  after giving  the opportunity to Kiereini  to be heard.

(d) This disposition   relates only to JEREMIAH  GITAU KIEREINI.

(e) As there  has  been  partial success,  and  the  matter is  of public  importance, each  party  shall  bear  its  own  costs  of this appeal   and in the High Court.

Dated and  delivered at Nairobi this 7th  day  of November, 2014

P.N. WAKI

..................

JUDGE OF APPEAL

W. KARANJA

.................

JUDGE OF APPEAL

J.W. MWERA

.................

JUDGE OF APPEAL

I certify that this  is a

true copy  of the  original.

DEPUTY REGISTRAR