COTES DU THONE LTD V BETTING CONTROL AND LICENCING BOARD & ANOTHER [2013] KEHC 6317 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

CONSTITUTIONAL AND HUMAN RIGHTS DIVISION

PETITION NO.522 OF 2012

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COTES DU THONE LTD..........................................................PETITIONER

VERSUS

BETTING CONTROL AND LICENCING BOARD...........1ST RESPONDENT

AMOS ODERO KWASI...................................................2ND RESPONDENT

RULING

The Application dated 13th November 2012 is premised on the provisions of Rules 20 and 21 of the Constitution of Kenya (supervisory Jurisdiction and Protection of Fundamental Freedoms of the individual) High court Practice and Procedure Rules, 2006 and Articles 22(2) and 258(1) of the Constitution, 2010. The Orders sought are that;

“1)…

2)That a Conservatory Order of Stay do issue against the directive by the 2nd Respondent to the petitioner to open and close business between 12 noon and 4. 00 a.m. Respectively as contained in his letters to Gaming Operators dated 3rd September 2012 pending the hearing and  determination of Prayer 3 of this Application.

3)That a Conservatory Order of Stay do issue against the directive by the 2nd Respondent to the petitioner to open and close business between 12 noon and 4. 00 a.m. Respectively as contained in his letters to Gaming Operators dated 3rd September 2012 pending the hearing and  determination of the petition herein.

4)That an interim injunction be made restraining the Respondents, their officers, servants and or agents from in any manner whatsoever interfering with the business and operations of the Petitioner pending the hearing and  determination of prayer 3 of the Application.

5)That a temporary injunction be made restraining the Respondent, its officers, servants and or agents from in any manner whatsoever interfering with the business and operations of the Petitioner pending the hearing and determination of he Petitioner's Petition.

6)That the costs of this Application be in the cause.”

2. The grounds in support are that;

a)The 2nd Respondent has directed the Petitioner to open and close its business premises specifically at 12 noon and 4. 00       a.m. In the morning respectively despite the fact that the chairman of the 1st Respondent had directed the Petitioner  to self regulate its hours of business as long as it does not breach any Law.

b)The 2nd Respondent has no powers to overrule the Chairman of the 1st Respondent or contradict his decision.

c)The directive by the 2nd Respondent is illegal, unreasonable, impractical, punitive and arbitrary as the petitioner has in its employment, people that rely on public transport which    is unavailable at 4. 00 in the morning.

d)the Petitioner's operations have been put into a spin in that  it shall be required to close business at about 11. 00 p.m. To enable its employees get transport home safely.

e)The Petitioner does not have lodging or taxi/cab facilities to either accommodate or drop its employees home.

f)The Petitioner has been put into a position that it may close business and send its staff home in total breach of their  rights to earn a living as enshrined under Article 39 of the Constitution and their right to a fair administrative action as enshrined under Article 47 of the Constitution.

g)The petitioner operates a gaming house where the duration  of the fames played therein are unpredictable and not under      the control of the Petitioner.

h)The directive to close business at 4. 00 a.m. has led to mass    exodus of customers most of whom are tourists in Kenya for    holiday due to interruption of their gaming.

i)No reason has been given to he Petitioner why it should open shop at 4. 00 a.m. yet other operators licensed by the Respondent are operating beyond 4. 00 a.m. and others 24hours a day.

j)Article 47(2) provides that where a right of fundamental  freedom is likely to be adversely affected by an administrative action, written reasons must be given. The Respondent has not done so despite request in writing.

k)Unless the Orders sought herein are made the petitioner will be driven out of business and its employee’s will be rendered  jobless.

3. The Supporting Affidavit sworn on 13th November 2012 by one Peter    Kibogo, General Manager of the Plaintiff company is brief and points          to facts deponed to in the Affidavit in support of the Petition sworn on the same day. In the latter Affidavit, he has deponed that the Petitioner runs a Casino by the name “Jokers Wild” and that since the Casino opened, it had established the hours of 7. 00 a.m. to 10. 00  p.m. As ideal for its business and clientelle. That the directive by the Respondents to have all Casinos operate from 12. 00 p.m. to 4. 00 a.m. has adversely affected its business as it has inconvenienced both its clientelle and staff and has caused massive losses to it.

4. Further, that the change in business hours was arbitrary, made without following the law and was also irrational and unreasonable.    It is also the Applicant's case that the 2nd Respondent by purporting to overturn decisions of the Board without lawful authority and acted capriciously and without due regard to the law.

5. That the actions of the Respondent are against the Vision 2030 blueprint of a 24-hour economy and is also inconsistent with the  Constitution; and that their actions are outdated and out of touch with the current reality in world business.

6. In response, the Respondents filed a Replying Affidavit sworn on 7th December 2012 by the 2nd Respondent and their case is that the           regulation of business hours for Casinos was lawful and that in fact what was unlawful was a directive by the then Chairman of the 1st Respondent purporting to reverse the hours of 12. 00 p.m.-4. 00 a.m. to the former hours of business as pleaded by the Applicant.

7. The 2nd Respondent also takes issue with the petition against him in his personal capacity and he urged the point that at all material       times he acted in his official capacity and in good faith.

8. It is also the Respondent's case tht all their actions were taken pursuant to the provisions of Section 46(3)of the Betting, LotteriesandGaming Act. Cap(3) which provides the mechanism for checks and balances in the Gaming Industry. That gambling is “a vice which if left unchecked can cause huge economic, social and emotional prejudices to the members of the Public” and due to its addictive nature,  the gambling industry cannot be left to the free enterprise.

9. Lastly, that the 1st Respondent does not derive any benefit in any way by reducing, regulating or extending the hours of operation of          Casinos an its main objective is to maintain clarity and sanity in the Gaming industry generally.

10. That therefore the Petition is without merit and should be dismissed with costs.

11. I have read the Submissions by advocates for the parties and I agree with Ms Kamande for the Respondents that in an Application of this nature, the approach taken by Ibrahim J. (as he then was) in Muslimsfor Human Rights vs Attorney General & 3 Others, H.C. Misc. Appl. No.7 of 2011 would be the best. The learned judge in that case opined, and I agree, that in matters where conservatory orders are     sought pending the hearing and of a Petition under the Constitution, the Court seized of the matter in exercising its discretion should consider, inter-alia, the following issues;

i)Whether the Applicant has made out a prima facie case that is arguable.

ii)Whether the case or petition will be rendered nugatory if the conservatory orders are not granted.

iii)the balance of convenience in the circumstances.

12. On the issue (1) above, I have perused the petition dated 13th November 2012 and the constitutional issues raised revolve around the right to equality (Article 27), social and economic rights (Article 43), freedom of movement (Article 39) and fair administrative action (Article 47). Further, declaratory orders are sought that Section 46(3) of the Betting, Lotteriesand Faming Act, Cap.131 is inconsistent with Articles 24(2), 39and 47 of the Constitution.

13. I should begin by addressing Section 46(3) of the Act, which provides as follows;

“(1)   …

(2)    …

(3)    The Board may, in respect of a licence issued under this Section, impose conditions providing for-

a)      the manner in which a person may conduct his business and the suitability, condition and conduct of the premises and the hours during which the premises may be open for business;

b)      the protection of persons taking part in the gaming against fraud;

c)      the payment of admission fees for persons resorting to the premises.

(4)     ...”

14. Without addressing the issue whether the Section is inconsistent with the Constitution or not, when the 1st Respondent imposes conditions on the hours during which gaming premises may be open for    business, prima facie, it is acting withing its statutory mandate and to    that extend only, this Court would not at this stage, intervene. It  would have been different if for example, the Board was assuming  powers it was never expressly granted by Statute. But that is not the end of the matter because I have seen conflicting directions from the 1st Respondent; in a letter dated 27th February 2012, one Lucas Maitha, writing as the Chairman of the 1st Respondent specifically directed that the Applicant should open its premises at 12. 00 p.m. and close at 4. 00 a.m. every day. In a subsequent letter dated 31st    August 2012, he directed all gaming operators to revert back to their “original operating schedules”. I consider it imperative to set out the letter in full for its import to be gleaned. It reads as follows;

“The Chairman31st August, 2012

Association of Gaming Operators,

Kenya (AGOK)

Utalii House

Box 53373-00200

NAIROBI.

Dear Sir,

REF:   OPENING AND CLOSING HOURS

Please refer to my letter ref:BCLB/26/VO1111/CC112 written to all Casino operators regarding the above. Further, refer to the meeting your umbrella body had with BCLB under my chairmanship on the 14th June 2012 at 2. 00 p.m in or boardroom.

Having listed to your complains on the impracticality of the 27th February 2012orders which would bring job losses to many Kenyans, insecurity of workers and gamblers who have to be released early, and the drive towards a 24 hour economy in which Kenya as a nation is encouraging and having further received complaints that some Casinos including Casino Malindi at the Coast have been allowed to operate out of the enforced hours unofficial due to demand by tourists I have today directed that all Casino operators should revert back to their former operating schedules. They should continue to self-regulate their business hours provided the Betting, Lotteries and  Gaming Act Cap.131, Laws of Kenya is fully complied with. I have taken this action in order to rationalize and bing uniformity in the industry

This directive takes effect immediately all operators stand advised.

Yours faithfully,

HON. LUCAS MAITHA

CHAIRMAN

CC       Director BCLD”

15. A casual reading of the above letter would bring out a number of    issues, vis;

a)       That a letter reference number BCLB/26/VOL.IIII/CC112 had previously been authored by Lucas Maitha to all gaming operators regarding opening and closing hours for their businesses.

b)       That a meeting between the Association of Gaming Operators of Kenya and the 1st Respondent was held on 14/6/2012 and chaired by the same Lucas Maitha.

c)       For reasons set out in the letter, it was directed that the original gaming hours be reverted to.

16. In a letter dated 3rd September 2012, the 2nd Respondent writing as       a Director of the 1st Respondent wrote to Association of Gaming     Operators of Kenya aforesaid and stated as follows;

“The Chairman3rd September, 2012

Association of Gaming Operators,

Kenya (AGOK)

Utalii House

Box 53373-00200

NAIROBI.

Dear Sir,

REF:   OPENING AND CLOSING HOURS

We refer to the above matter and a letter to you by Chairman of 31st August, 2012.

We wish to inform you that the position of the Board in respect to opening and closing hours for public Gaming Premises (Casino) still remains as    communicated in or three letters dated 27th February, 2012 23rd and 30th May, 2012 respectively.

We therefore wish to inform you to treat the letter dated 31st August, 2012 as null and void and legal action shall be taken against any of your members of any other operator not complying with the set hours.

This directive takes effect immediately all operators stand advised.

Yours faithfully,

A.O.KWASI

DIRECTOR

cc         Permanent Secretary

Office of the Vice-President and

Ministry of Home Affairs

NAIROBI.”

17. It is the 2nd Respondent's argument before me that the letter of 31st August 2012 was influenced by probable misconduct on the part of Lucas Maitha because upon writing it, he resigned from the Chairmanship of the 1st Respondent three days later. He provided no evidence of such influence and specifically, he never stated that the Applicant was party to any conspiracy to defeat the law.

18. Further, it is instructive that the letter dated 27th February 2012  referred to in the 2nd Respondent's letter of 3rd September 2012 was authored by Lucas Maitha and not the 2nd Respondent. I do not  have on the record the letters dated 13th May 2012 and 30th May 2012 and so I have no idea what they contain.

19. The 2nd Respondent is not the chairman of the 1st Respondent and  there is no evidence that when he wrote the letter dated 3rd September 2012, he had been authorized by the Chairman to do so  and that a gazettee notice had been published to that effect. He may well argue that Lucas Maitha had resigned on 3rd September 2012 and that effectively there was no Chairman of the 1st Respondent.The answer has in Section 3(2)of theAct which provides as follows;

“In the event of the chairman being absent from any meeting of     the Board, the members present shall choose one of heir number to act as Chairman for that meeting”

Where is the evidence that the Board met and authorized the 2nd Respondent to author the letter of 3rd September 2012 reproduced above?

20. In her Submissions, Ms. Kamande introduced Legal Notice No.81 of15th June 2005, where one J. I. Adongo, chairman of the 1st        Respondent gave such authorization to the Director of Gaming. The Notice is dated 4th July 2009 and the argument made is that it was  to operate in perpetuity. It cannot be so because Section 3(10) of the Act must be read with Section 3(1) regarding the appointment of  the Chairman. Mr. Adongo was not the Chairman when the letter of 3rd September 2012 was written and there is no law that the 2nd    Respondent should enjoy powers conferred to another officer by a retired chairman. He ought to have and for avoidance of doubt, he ought now to obtain authorization from the sitting chairman appointed and gazetted under Section 3(1). To say otherwise would  be to create uncertainty leading to a procedural and legal quagmire.

21. It would not be the first time that the High Court is telling the 2d    Respondent to act within the law and not on his won whims – see the       decision of Khaminwa J. in Republic vs Betting Control and LicensingBoard ex-parte Fim Loxx Ltd. H.C Misc. Appl No.288/2003 (Msa)where he was castigated for usurping the powers of the Director  when he was Deputy Director of Gaming.

22. And so sadly, the overzealousness of the 2nd Respondent to pour cold water on the actions of Lucas Maitha cannot be mitigated by his      own action which prima facie appear to be in contravention of the Act.

23. In a nutshell, what I am saying is that with the facts as placed before me and without in any way purporting to go to the merits of the Petition, the letter of 31st August 2012 at face value superseded the one dated 27th February 2012 and that the one dated 3rd September 2012 by the 2nd Respondent, even if made in good faith, cannot be  taken as lawful. Incidentally Section 3(12) of the Act protects the 2nd Respondent and to that extend, I agree with him that he ought  not to have been sued in his personal name and I will at the end of this Ruling strike his name out of the proceedings for that reason.

24. In the end, I find and hold that the Petition is neither frivolous nor vexatious but in fact raised arguable sues.

25. On issue No.(ii), once I have ruled as I have done above, it is obvious that when a Respondent act is the way the present Respondents have acted, the Court must intervene not to allow a prima facie unlawful directive to operate to the prejudice of an entrepreneur who has shown that the consequences of abiding by  such a directive would cause damage and in effect legitimate the directive thus rendering the hearing of the Petition otherwise nugatory.

26. On issue No.(iii), I have been pointed to the decision of Wendoh J. in Charles Shikanga & Stephen Ndichu H.C Misc. App. No.1023 of 2005 where the issue of gaming hours was also addressed. In refusing to quash a decision of the 1st Respondent to change he said hours, she  stated that the Board had jurisdiction under Section     46(3) to do so and held quite correctly that there is need to regulate “timing of  Casinos … to protect would be weak and compulsive members of society from exploitation through addiction ...” and that  such a matter “cannot be left to the whims of free enterprise” That finding may apply generally but in the circumstances of this case, I have shown above that internal disagreements within the 1st  Respondent have created conflicting directives to owners of Casinos.     How will they know which one to follow?

27. Further, and in line with Wendho J.'s argument above, clearly the  party to be prejudiced if no conservatory orders are granted would         be the Applicant. The 2nd Respondent has stated on oath that by      regulating gaming hours, the Board obtains no advantage or gain.

That is a correct statement because save for license fees, it has no  other benefit. On a balance therefore, equity must favour the party  that may suffer unless the Orders are granted. That party is the Applicant.

28. In conclusion, I will order as follows;

i)        The 2nd Respondent's name is struck off the proceedings. Costs therefore shall be paid by the Applicant who improperly sued him inspite of Section 3(1) of the Betting, Lotteries and Gaming Act.

ii)       The Application dated 13th November 2012 is allowed in  terms of Prayer 3 thereof.

iii)      In line with Article 159(2)(c), of the Constitution, I shall  order the 1st Respondent together with he Association of Gaming Operators Kenya (AGOK) to commence discussions on gaming hours across Kenya.

iv)      In the meantime, directions on the hearing of the petition dated 3rd November 2012 shall be given.

v)       Costs of the Appreciation shall abide the Petition.

28. Orders accordingly.

DATED, DELIVERED AND SIGNED AT NAIROBI THIS 1ST DAY OF MARCH, 2013

ISAAC LENAOLA

JUDGE

In the presence of:

Irene – Court Clerk

Mr. Macharia for Petitioner

Ms. Kamande for Respondent

Order

Ruling duly read.

ISAAC LENAOLA

JUDGE

Further Order

Mentioned on 17/4/2013 for directions.

ISAAC LENAOLA

JUDGE